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GIFT  or 

Mr.    Charles  H.   Wood 


mmmi  of  mmm 

JAN  2  7  1928 


THE  BUSINESS  MAN'S 
ENCYCLOPEDIA 


A  Hip-Pocket   Business   Counsellor  —  A  Pigeon-Hole    Legal 

Adviser — An  Office  Hard- Nut  Cracker — A  Commercial 

Britannica — A   Business    Man's  Guide   Book, 

Combined  Into  Two  Volumes  —  As  full 

of  facts  and  useful  information  as 

a  plum  pudding  is  of  plums 


COMPILED  BY  27  EXPERTS 


Who  have  worried  about  as  you  have  worried  about — worked 

over  as  you  have  worked  over  —  solved  as  you  want 

to  solve  —  the  vexatious  business   questions 

and  legal   points   these  two  little 

volumes  so  readily  answer 


^ 


>^^ 


THE    SYSTEM    COMPANY 
CHICAGO 


^/^^  dl^uJ^  7^-  ^-^ 


COPYRIGHT  1905,  BY 
THE   SYSTEM   COMPANY 


CONTENTS 


VOLUME  I 


BOOK  I  — BUSINESS  LAW— 1-97 


Contracts i 

Sale  of  Personal  Property  5 

Torts 7 

Commercial  Paper 9 

Partnership 14 

Banks  and  Banking r6 

Agency 20 

Corporations 23 

Insurance 34 

Landlord  and  Tenant  ...  39 

Carriers 41 

Exemption  Laws 44 

Chattel  Mortgages 50 


Acknowledgement  of 

Deeds 60 

Wills 62 

Bankruptcy  Law 63 

Department  of  Commerce 

and  Labor 64 

Patent  Office  Procedure.  66 

Copyright  Law 71 

Legal  Holidays 75 

Labor  Legislation 78 

Eight  Hour  Law 79 

Passport  Regulations 83 

Naturalization  Laws 86 

Postal  Laws 89 


BOOK  II  — BUSINESS  METHODS  — 98-156 


Correspondence 98 

Collections 105 

Bookkeeping 107 

Price  Marks 1 1 1 

Investments 1 1 1 

Shorthand 114 

Mail  Order  Business 116 


Fire  Insurance  Adjust- 
ments   118 

Costs 126 

Window  Dressing 131 

Signs 134 

Advertising 136 

Short  Cuts 150 


S5C0i9 


Digitized  by  the  Internet  Archive 

in  2007  with  funding  from 

IVIicrosoft  Corporation 


http://www.archive.org/details/businessmansencyOOchicrich 


Xne  Susmess  Man  a  Encyclopedia 
BOOK  I 

BUSINESS  LAW 

An  eminent  lawyer  has  said  that  it  is  astonishing 
within  how  small  a  space  all  the  principles  of  commer- 
cial law  can  be  compacted.  These  laws  are  generally 
clear  and  non-technical,  being  the  actual  practice  of  the 
business  community,  expressed  in  rules  and  maxims, 
and  invested  with  the  authority  of  law. 

CONTRACTS 

The  most  important  subject  embraced  in  the  di- 
vision, "Commercial  Law,"  is  that  of  Contracts,  nearly 
every  act  common  to  business  being  some  form  or 
modification  of  a  contract. 

A  contract  is  a  deliberate  agreement  between  com- 
petent persons  upon  a  legal  consideration,  to  do  or  ab- 
stain from  doing  a  particular  thing. 

Competency  and  Incompetency. — The  common  rule 
is  that  any  person  of  legal  age  and  of  a  sane  mind  may 
enter  into  a  binding  contract  if  he  does  so  voluntarily 
and  freely.  Common  law  and  most  statute  laws  fix  a 
person's  age  at  21,  but  in  a  few  of  the  states  a  female 
becomes  of  age  at  18  or  when  married.  Of  the  many 
conditions  of  incompetency  or  disability  rendering  per- 
sons incapable  of  makirg  binding  contracts,  the  fol- 
lowing are  the  ones  generally  accepted:  (1)  Minority; 
(2)  insanity;  (3)  idiocy;  (4)  alien  belligerency;  (5) 
duress;  (6)  drunkenness  to  an  extent  that  the  ordinary 
faculties  are  not  in  operation. 


2  yBUSWESS    MAN' 8    ENCYCLOPEDIA. 

The  contracts  of  minors  are  not  absolutely  void,  but 
voidable,  if  they  choose,  although  an  infant  may  bind 
an  adult  to  a  contract.  The  party  making  a  contract 
with  a  minor  is  bound,  if  he  himself  is  competent,  and 
cannot  rescind  it  without  the  minor's  consent.  It  is 
optional  with  the  infant,  only,  or  his  representatives, 
to  avoid  the  contract.  For  example,  a  minor  may  affirm 
or  rescind  a  contract  made  before  his  majority,  within 
a  reasonable  time  after  becoming  of  age.  Even  when 
a  contract  has  been  executed,  an  infant  may  disaffirm 
it,  as  in  the  case  of  a  sale  of  an  article,  he  may  re- 
claim it  by  tendering  the  purchase  price.  However,  if 
minors  are  without  parents  or  guardian,  they  may  be 
held  for  all  contracts  for  necessities  of  life,  and  some 
authorities  contend  that  they  may  be  held  for  all  con- 
tracts. Necessities  of  life  are  generally  construed  to 
mean  clothing,  food,  shelter,  medical  services  and  an 
ordinary  education  as  determined  by  the  minor's  actual 
condition. 

Proposition  and  Acceptance. — A  proposition  is  a 
mere  offer  made  to  one  person  by  another,  and  may  be 
either  oral  or  written.  An  acceptance  is  an  assent  to 
the  offer  made  and  completes  the  bargain.  There  can 
be  no  agreement  without  a  proposition  and  an  accept- 
ance, this  being  legally  known  as  "a  meeting  of  the 
minds,"  an  essential  to  every  contract.  When  a  propo- 
sition is  made  orally,  in  order  to  be  binding  the  ac- 
ceptance must  be  immediate  or  within  such  a  time  as 
the  parties  had  in  contemplation,  unless  a  definite 
period  of  time  in  which  to  accept  or  reject  is  stipulated, 
but  such  proposition  may  be  withdrawn  before  the  ex- 
piration of  the  stipulated  period  if  not  accepted  before- 
hand. If  the  acceptance  is  to  be  written  the  proposi- 
tion is  accepted  as  soon  as  the  letter  is  placed  in  the 
mail  or  telegram  is  left  with  the  telegraph  company. 

Necessary  Elements. — Every  contract  must  contain 
the  five  following  essential  elements  in  order  to  be 
binding:  (1)  Parties  thereto  must  be  competent  to  con- 
tract; (2)  there  must  be  consideration  expressed  or  im- 
plied; (3)  a  certain  thing  to  be  done  or  not  to  be  done 
^aust  constitute  the  subject  matter;    (4)  mutual  assent 


BUSINESS    LAW.  3 

must  be  present;  (5)  there  must  exist  an  agreed  period 
for  the  performance  of  the  contract. 

Classification  and  Kinds  of  Contracts. — The  majority 
of  contracts  are  included  in  the  class  parol  contractSf 
or  those  not  made  under  seal,  as  opposed  to  specialties, 
or  those  contracts,  as  mortgages,  bonds,  leases,  etc., 
made  under  seal.  A  contract  under  seal  is  one  that  has 
a  seal  in  connection  with  the  signature,  which  seal  may 
be  a  small  wafer  or  scroll,  or  an  imitation  thereof, 
printed  or  made  with  the  pen.  A  specialty  contract 
needs  no  consideration  either  expressed  or  implied,  as 
neither  party  can  deny  the  facts  concerning  the  con- 
tract. However,  the  seal  is  gradually  going  out  of  use, 
the  law  not  now  attaching  the  same  degree  of  im- 
portance to  its  use  as  formerly. 

There  are  eight  kinds  of  simple  contracts,  given  and 
defined  as  following:  Expressed  contracts  are  those 
positively  stating  the  terms  of  agreement.  Implied 
contracts  are  those  the  terms  and  conditions  of  which 
are  not  all  either  oral  or  written,  and  which  in  case  of 
dispute,  the  law  will  interpret,  basing  its  decision  upon 
the  probable  intention  of  the  parties.  When  the  con- 
sideration is  implied,  the  law  grants  what  is  just  and 
reasonable.  Executed  contracts  are  those  the  stipula- 
tions of  which  have  already  been  complied  with. 
Executory  contracts  are  those  which  are  to  be  per- 
formed at  some  future  date.  Oral  contracts  are  those 
made  by  means  of  spoken  words  in  contradistinction  to 
contracts  in  writing.  Written  contracts  are  those  the 
conditions,  terms,  and  other  essentials  of  which  are  in 
writing.  Joint  contracts  are  those  in  which  all  the 
parties  are  jointly  bound  to  support  the  terms  and  con- 
ditions stipulated.  Several  contracts  are  those  binding 
each  party  to  the  performance  of  the  whole  obligation. 

Statute  of  Frauds. — This  statute,  enacted  in  England 
In  1677  and  re-enacted  in  part  or  in  whole  with  various 
modifications  in  all  the  United  States,  states  that  all 
contracts  must  be  in  writing  when ,  having  any  of  the 
following  conditions:  (1)  For  the  sale  of  any  interest 
in  lands;  (2)  leases  of  land,  except  in  certain  cases,  for 
one  year  or  more;  (3)  if  not  by  their  own  terms  to  be 
performed  within  one  year;    (4)  if  made  upon  consid- 


4  BUSINESS    MAN'S    ENCYCLOPEDIA. 

eration  of  marriage,  except  mutual  promises  to  marry; 
(5)  to  answer  for  the  debt,  default  or  miscarriage  of 
another;  (6)  for  the  sale  of  goods,  chattels  or  things 
In  action  for  the  sum  of  $50  or  more  (amount  differs 
in  different  states),  unless  the  purchaser  receives  a  part 
of  the  thing  or  pays  part  of  the  purchase  price,  or  the 
sale  be  by  auction. 

Besides  lawful  contracts^  or  those  made  in  goo(? 
faith  by  competent  parties  which  the  law  will  enforce, 
there  are  various  other  contracts  not  lawful  and  hence 
not  to  be  enforced.  Unlawful  contracts  are  those  in 
violation  of  the  law  where  made  and  are  void  every- 
where. Illegal  contracts  are  those  contrary  to  the  acts 
of  government.  A  contract  to  obstruct  a  lawful  busi- 
ness would  come  in  this  class.  Fraudulent  contracts 
are  those  operating  as  an  injury  to  or  a  fraud  on  a 
third  person.  Transfer  of  property  before  making  an 
assignment  to  creditors  comes  under  this  head.  Im- 
moral contracts  embrace  those  opposed  to  the  moral 
welfare  of  a  community,  as  a  contract  to  commit  adul- 
tery, or  desecrate  the  Sabbath,  etc.  The  law  will  not 
rescind  nor  enforce  an  executory  contract  of  this  na- 
ture. 

Interpretation  and  Construction. — In  construing  con- 
tracts, the  intention  of  the  parties  must  govern;  words 
are  to  be  taken  in  their  natural  and  obvious  sense; 
when  the  intention  is  doubtful  the  context  may  be  re- 
sorted to  to  explain  ambiguous  terms;  the  whole  of 
the  instrument  is  to  be  viewed  and  compared  in  all  its 
parts,  so  that  every  part  of  it  may  be  made  consistent 
and  effectual.  Where  the  language  of  an  agreement  is 
plain  and  unequivocal,  there  is  no  room  for  construc- 
tion, and  it  must  be  carried  into  effect  according  to  its 
plain  meaning.  Ambiguities  in  deeds  or  other  instru- 
ments are  generally  interpreted  against  the  grantor,  or 
contractor. 

Performance. — A  person  who  undertakes  to  perform 
a  piece  of  work  by  special  contract,  must  perform  his 
contract  before  he  is  entitled  to  his  pay.  If  a  person  is 
hired  for  six  months,  or  other  definite  time,  and  leaves 
before  the  end  of  it,  without  reasonable  cause,  he  loses 
his  right  to  wages  for  the  period  he  has  served.     But 


BUSINESS    LAW.  5 

if  he  is  dismissed  without  cause  he  can  recover  for  the 
whole  term — at  its  expiration.  It  is  no  sufficient  cause 
for  abandoning  one's  contract,  that  he  was  put  upon 
work  not  contemplated  at  the  time  the  contract  was 
made,  but  if  he  is  prevented  by  sickness  from  laboring 
during  the  stipulated  period,  he  may  recover  for  Jiis 
services  as  much  as  his  services  were  worth,  for  the 
time  he  labored. 

Specific  Performance. — The  law  side  of  the  court 
cannot  enforce  the  specific  performance  of  a  contract. 
It  can  only  allow  damages  for  the  failure  to  perform, 
or  for  breach.  On  the  equity  side  of  the  court,  certain 
contracts  may  be  enforced  specifically.  They  most  com- 
monly relate  to  the  sale  of  real  property. 

Rescinding. — In  general,  a  contract  cannot  be  re- 
scinded, unless  by  consent  of  both  parties,  except  in 
case  of  fraud.  A  party  having  a  right  to  rescind  a  con- 
tract, must  exercise  the  right  within  a  reasonable  time. 

Where  parties  agree  to  rescind  a  sale  once  made  and 
perfected  without  fraud,  the  same  formalities  of  de- 
livery, etc.,  are  necessary  to  revest  the  property  in  the 
original  vendor,  which  were  necessary  to  pass  it  from 
him  to  the  vendee.  A  contract  required  by  law  to  be 
in  writing  cannot  be  dissolved  by  verbal  agreement. 

Damages. — Each  party  to  a  contract  is  legally  bound 
to  perform  his  part  or  pay  damages  to  the  extent  of 
loss  sustained.  While  it  is  not  possible  in  exceptional 
cases  for  the  law  to  compel  a  specific  ^performance  of 
a  contract,  it  does  require  a  money  payment  to  the 
extent  of  injury  incurred,  in  lieu  of  non-performance. 

SALE  OF  PERSONAL  PROPERTY 

Contracts  of  Sale. — This  is  governed  by  the  same 
principles  of  law  as  other  contracts. 

Sale. — A  sale  is  the  transfer  of  the  title  in  the  thing 
sold  from  the  vendor  to  the  vendee  in  consideration  of 
a  certain  money  price.  It  assumes  absolute  immediate 
transfer.  The  elements  that  are  essential  to  a  valid 
sale  are:  (1)  The  thing  or  subject  matter  of  the  sale; 
(2)  the  price;  (3)  the  mutual  consent  of  the  parties 
who  have  the  ability  to  contract. 


6  BUSINESS    MAN'S    ENCYCLOPEDIA. 

Subject  Matter. — That  which  is  to  be  sold  must  have 
either  an  actual  or  potential  existence  and  must  be  ca- 
pable of  delivery,  though  it  may  not  come  into  existence 
until  after  the  date  of  sale.  The  subject  of  a  sale  must 
be  legal  to  be  valid. 

Price. — Price  is  the  consideration  given  by  the  pur- 
chaser in  exchange  for  his  property  inducing  the  seller 
to  part  with  the  ownership.  To  constitute  a  sale  the 
price  in  money,  or  its  equivalent,  must  be  a  definite  and 
certain  sum  or  be  capable  of  determination,  as  the 
"market  price."  The  general  rule  is  that  the  parties 
can  agree  upon  any  price  they  choose. 

Consent  of  the  Parties. — ^Without  a  mutual  consent 
of  both  parties  to  the  terms  of  the  contract  there  can 
be  no  sale.  A  mistake  in  regard  to  price,  identity  of 
goods,  or  the  like,  will  destroy  the  sale. 

iVIode  of  Making  Contract. — At  common  law  no 
formality  is  necessary  to  the  making  of  a  sale.  The 
seller  and  the  buyer  agree  upon  the  price,  which  the 
buyer  pays,  the  seller  thereupon  delivering  the  goods, 
thus  completing  the  sale.  A  binding  contract  to  sell  for, 
and  to  pay,  a  certain  price,  however  large,  was  good  at 
common  law,  and  remains  good  now,  in  all  cases  where 
the  price  is  not  large  enough  to  bring  the  contract 
within  the  statute  of  frauds.  See  Statute  of  Frauds, 
(6)  under  Contracts, 

Transit  of  Goods. — ^When  the  purchaser  lives  remote 
from  the  seller  the  goods  should  be  sent  as  the  buyer 
directs.  No  directions  for  shipment  being  given,  seller 
ships  by  the  customary  route.  Ordinary  care  protects 
the  buyer  from  loss  sustained  in  the  transit. 

Stoppage  Goods  on  the  Way  to  Purchaser. — The 
seller  of  goods,  under  certain  conditions,  has  a  right 
to  stop  goods  that  are  in  a  carrier's  hands  and  on  the 
way  to  the  buyer  at  some  distant  point.  This  is  termed 
stoppage  in  transit. 

Defects. — Should  there  be  any  defects  in  the  prop- 
erty or  animals,  which  can  be  seen,  that  does  not  re- 
lieve the  buyer  from  meeting  his  obligations,  though 
he  claims  not  to  have  seen  the  defects.  But  if  the 
defects  can  not  be  seen  and  the  seller  recommends  the 


BU8INE8S    LAW,  7 

property  as  good  or  sound,  the  buyer  is  relieved  from 
filling  his  part  of  the  contract. 

Warranty. — If  the  seller  of  goods  makes  any  asser- 
tion respecting  the  kind,  quality,  or  condition  of  the 
article  upon  which  he  intends  the  purchaser  should  rely 
as  a  fact,  and  upon  which  he  does  rely,  that  is  a  war- 
ranty. Where  goods  are  sold  by  sample  there  is  an  im- 
plied warranty  that  the  goods  correspond  with  the 
sample. 

It  is  a  general  rule  that  the  employer  will  be  bound 
by  the  warranty  of  his  clerk  or  shopman,  if  acting  with- 
in the  scope  of  his  authority. 

Warranty  must  be  at  the  time  of  sale;  if  it  be  made 
after,  it  is  void  for  want  of  consideration. 

Fraud  on  Part  of  the  Buyer. — If  the  buyer  has  been 
guilty  of  such  fraud  as  entitles  the  seller  to  rescind  the 
sale;  or  if  the  buyer  is  actually  insolvent;  or  if  he  has 
misrepresented  his  condition  or  made  false  pretenses 
in  buying;  or  if  he  be  so  embarrassed  that  in  reason- 
able probability  he  cannot  pay  for  the  goods,  the  seller 
has  a  right  to  stop  them  in  transit. 

If  the  goods  were  sent  to  pay  a  debt  of  the  seller's 
they  cannot  be  stopped. 

Sales  at  Auction. — A  public  sale  of  property  to  the 
highest  bidder  is  an  auction  sale  and  must  be  so  con- 
ducted that  free  and  fair  competition  may  be  had.  By- 
bidding  and  combination  bidding  is  unlawful  and  ren- 
ders the  sale  voidable  at  the  option  of  an  honest  buyer. 

Sale  of  "Good-Will." — By  good-will  is  meant  a  man's 
business  or  the  business  of  a  firm  as  distinguished  from 
the  stock  in  trade  or  capital.  It  is  the  reputation  which 
a  firm  acquires  by  their  business  methods.  A  pur- 
chaser of  a  business  including  the  good-will  should  in- 
sist upon  a  contract  specifying  the  amount  he  shall  re- 
ceive as  damages  should  the  seller  become  interested 
in  a  competing  business. 

TORTS 

The  word  tort  is  used  to  describe  that  branch  of  the 
law  which  treats  of  the  redress  of  injuries,  which  are 
neither  crimes  nor  arise  from  the  breach  of  contracts. 


8  BUSINESS    MAN'S    ENCYCLOPEDIA. 

This  branch  of  the  law  is  of  growing  interest  to  the 
business  man  because  of  the  frequent  institution  of 
suits  by  employes  for  damages  incurred   in  service. 

Doctrines  of  Ordinary  Prudence. — Ordinary  prudence 
is  generally  that  course  of  conduct  which  prudent  per- 
sons take  for  the  safety  and  protection  of  their  own 
persons  from  an  injury  which  is  liable  to  occur  to  them 
in  the  place  and  under  the  circumstances  which  sur- 
round them.  This  is  opposed  to  negligence  which  must 
be  shown  by  the  plaintiff  in  an  action  for  damages. 

Liability  of  Employer. — A  master  owes  to  his  serv- 
ant certain  inalienable  non-assignable  duties  peculiar 
to  that  relationship,  based  in  general  upon  the  duty  not 
to  expose  him  to  unnecessary  or  unreasonable  risks. 
The  servant  has  a  right  to  assume  that  his  employer 
has  performed  these  duties.  They  consist  in  the  exer- 
cise of  reasonable  care  with  reference  to  (1)  providing 
and  maintaining  suitable  appliances,  machinery,  and 
places  to  work;  (2)  providing  proper  fellow  servants  in 
sufficient  number;  (3)  making  and  promulgating  rules 
for  the  regulation  of  servants  and  giving  warning  and 
instruction  especially  to  youthful  and  inexperienced 
employes  with  reference  to  danger;  (4)  inspecting  ap- 
pliances, machinery,  and  places  to  work,  supervising 
fellow  servants,  and  securing  the  observance  of  rules. 
However,  a  master  is  liable  only  for  failure  to  exercise 
reasonable  care  in  the  performance  of  his  duties  to  his 
servant.     He  is  not  an  insurer. 

Ordinary  and  Extraordinary  Risks. — The  law  as- 
sumes that  a  servant  possesses  ordinary  knowledge  of 
and  will  exercise  ordinary  prudence  in  the  occupation 
which  he  undertakes  and,  excluding  the  negligence  of 
fellow  servants,  assumes  the  ordinary  risks  of  his  em- 
ployment. If  the  risks  of  an  employment  are  extraor- 
dinary and  are  knowingly  assumed  by  the  servant,  he 
cannot  recover  from  his  employer. 

Strikes  and  Boycotts. — Webster's  Imperial  Diction- 
ary defines  a  strike  as,  "The  act  of  workers  in  any 
branch  of  industry  discontinuing  work  with  the  object 
of  inducing  their  employer  to  concede  certain  demands 
made  by  them;  sometimes  marked  by  violence  on  the 
part  of  those  striking  or  their  sympathizers,  or  by  active 


BU8INE8S    LAW,  9 

attempts  to  injure  the  business  of  the  employer,  as  "by 
boycott,  intimidation,  and  the  picketing  of  the  employ- 
er's place  of  business  to  prevent  the  employment  ot 
other  help,  and  to  dissuade  those  employed  from  re- 
maining at  work.'*  In  order  to  come  within  the  law  of 
torts  and  be  actionable  as  such,  strikes  and  boycotts 
must  have  as  essential  elements  (1)  A  combination  of 
persons  to  do  harm  to  another;  (2)  malicious  intent; 
(3)  damage  to  complainant.  The  common-law  right  of 
laborers  to  combine  and  use  peaceful  means  to  advance 
their  interests,  and,  more  specifically,  the  price  of  labor, 
has  been  generally  broadened  by  statute.  When  such 
a  statute  extends  the  common-law  rights  as  to  combina- 
tions of  labor,  the  courts  recognize  corresponding 
changes  in  the  rights  of  employers  to  combine  to  resist 
employes.  Employers'  unions,  formed  in  opposition  to 
employes'  unions  are  lawful,  not  being  made  to  lower 
the  price  of  labor.  As  regards  the  act  of  strikers  leav- 
ing in  a  body,  such  is  held  to  be  a  combination  in  itself 
wrongful  and  illegal.  The  intent  to  injure  another  with- 
out lawful  provocation  must,  however,  be  clearly  shov/n. 
Legal  authorities  are  not  in  accord  as  to  what  con- 
stitutes a  (legal)  voluntary  association  and  an  (illegal) 
boycott.  The  rule  having  most  ample  support,  is  that 
while  a  trader  may  lawfully  engage  in  the  sharpest 
competition  with  those  in  a  like  business  by  holding  out 
extraordinary  inducements,  by  representing  his  own 
wares  to  be  better  and  cheaper  than  those  of  others, 
yet  when  he  oversteps  that  line,  and  commits  an  act 
with  the  malicious  intent  of  inflicting  injury  upon  his 
rival's  business,  his  conduct  is  illegal,  and  if  damage 
results  from  it,  the  injured  party  is  liable  to  redress. 

COMMERCIAL  PAPER 

Negotiable  Instruments. — Practically  every  written 
contract  or  agreement  involving  the  payment  of  money 
is  negotiable  in  the  sense  that  the  owner  can  sell  it  to 
another  and  that  the  purchaser  can  enforce  it  to  the 
same  extent  that  the  original  owner  could  if  he  had  not 
assigned  it.  Bonds  and  mortgages,  contracts  for  sales, 
leases,   etc.,  would  be  negotiable,  but  in  the  strictest 


10  BUSINESS    MAN'S    ENCYCLOPEDIA. 

sense  there  are  but  three  forms  of  negotiable  commer- 
cial paper  in  common  use — checks,  promissory  notes, 
and  bills  of  exchange  or  drafts. 

Form. — While  there  is  no  regular  prescribed  form 
for  these  instruments,  there  are  certain  orderly  forms 
which  are  usually  followed  and  there  are  certain  pre- 
requisites without  which  they  are  non-negotiable  in- 
struments: (1)  They  must  be  in  writing  (ink,  pencil, 
or  type  impressions),  and  signed  by  the  maker  or 
drawer;  (2)  they  usually  state  the  place  and  date  of 
making;  (3)  they  must  be  payable  on  demand,  at  a 
fixed  time,  a  determinable  future  time  or  at  a  time  cer- 
tain to  occur;  (4)  the  promise  to  pay  must  be  uncon- 
ditional and  "to  order"  or  "to  bearer,"  and  in  money; 
(5)  a  place  of  payment  is  usual,  if  not  stated,  the  place 
or  business  or  residence  of  the  maker  or  the  acceptor 
or  drawee  is  assumed;  (6)  they  must  not  show  any 
alterations — erasures  or  additions — on  their  face;  (7) 
they  must  not  carry  on  their  face  any  information  that 
would  lead  a  prudent  man  to  inquire  further  as  to  their 
validity;  (8)  the  time  of  payment  expressed  in  the  in- 
strument must  not  have  passed. 

Consideration. — It  is  not  positively  necessary  to  ex- 
press consideration  in  negotiable  papers,  but  it  is  best 
to  do  so.  In  the  hands  of  an  innocent  holder  the  law 
assumes  that  there  was  a  valuable  consideration. 

Promissory  Notes. — A  promissory  note  is  a  written 
promise  to  pay  a  certain  sum  of  money  at  a  specified 
time.  There  are  three  kinds,  individual  promissory 
noteSf  or  those  made  by  one  party  to  pay  another  a 
certain  sum  of  money  at  a  specified  time;  joint  promis- 
sory notes,  the  same  as  the  foregoing,  only  signed  by 
two  or  more  parties,  in  which  case  all  are  liable  jointly 
but  not  severally;  joint  and  several  promissory  notes, 
in  which  two  or  more  parties  severally  and  separately 
agree  to  pay  a  certain  sum  at  a  specified  time.  Each 
signer  of  such  note  is  responsible  for  the  whole  pay- 
ment. 

Negotiability. — A  paper  is  made  negotiable  by  the 
words  "or  bearer,"  or  "or  order."  In  the  former  case 
endorsement  is  not  necessary  or  customary  except  in 


BUSINESS    LAW.  11 

the  case  of  forwarding  banks;  in  the  latter  case  it  is 
negotiable  only  by  the  endorsement  of  the  payee. 

Holder  for  Value. — Negotiable  paper  passing  into  the 
hands  of  an  innocent  holder  for  fair  and  full  considera- 
tion and  in  good  faith  carries  with  it  a  good  title,  pro- 
viding (1)  The  instrument  is  negotiable;  (2)  was  ob- 
tained in  good  faith  and  for  a  valuable  consideration 
before  maturity;  (3)  the  purchaser  must  not  be  aware 
of  any  legal  or  equitable  defense. 

Parties  tq  Negotiable  Instruments. — The  rule  gov- 
erning the  capacity  of  a  party  to  incur  liability  on  com- 
mercial paper  is  the  same  as  that  holding  good  regard- 
ing contracts. 

Protests. — A  protest  of  a  note  is  a  formal  statement 
by  a  notary  that  the  paper  was  presented  for  payment 
and  payment  refused.  When  a  note  is  not  duly  paid  on 
presentation,  it  is  said  to  be  "dishonored"  and  is  taken 
to  a  notary  puhUCr  who  again  presents  it,  and,  if  not 
paid,  he  notes  its  non-payment,  and  afterwards  draws 
up  a  formal  protest,  that  legal  proceedings  may  be 
taken  for  recovering  the  amount  due.  Should  there  be 
indorsers  and  no  protest  is  made,  the  indorsers  in  some 
states  are  released. 

The  holder  of  a  note  may  give  notice  of  protest 
either  to  all  the  previous  indorsers  or  only  to  one  of 
them;  in  the  latter  case  he  must  select  the  last  in- 
dorser,  and  the  last  must  give  notice  to  the  la^t  before 
him,  and  so  on. 

Where  notice  of  protest  is  duly  addressed  and  de- 
posited in  the  postoffice,  the  sender  is  deemed  to  have 
given  due  notice,  notwithstanding  any  miscarriage  in 
the  mails. 

Where  days  of  grace  are  allowed  by  statute  on  notes, 
they  are  not  considered  due  until  the  expiration  of  the 
days  of  grace.  If  a  note  is  presented  and  payment  de- 
manded on  the  last  day  of  grace,  and  payment  refused, 
the  maker  is  in  default,  and  notice  of  dishonor  may 
forthwith  be  given  to  the  indorser.  For  days  of  grace 
allowed  by  the  statutes  of  different  states,  see  Interest 
Laws  and  Statutes  of  Limitation. 

A  note  made  payable  at  a  bank  and  held  there  for 
payment  until  the  usual  hour  for  closing,  need  not  be 


12  BUSINESS    MAN'S    ENCYCLOPEDIA. 

presented  to  the  maker  in  person  to  bind  the  indorser. 
It  may  be  protested,  as  in  the  case  of  drafts,  imme- 
diately on  the  close  of  bank  hours.  Payment  must  be 
immediately  demanded  of  the  indorser  if  he  resides  in 
the  same  place;  if  he  is  a  non-resident  he  must  be  noti- 
fied at  once  by  letter. 

Presentment  Not  Necessary  to  Render  Maker  Liable. 
— Presentment  for  payment  is  not  required  in  order 
to  charge  the  maker  of  a  note. 

Suitdays  and  Holidays. — When  the  day  of  maturity 
falls  upon  Sunday  or  a  legal  holiday  the  note  is  payable 
on  the  next  succeeding  business  day. 

By  Whom  Demand  May  Be  Made. — The  holder  of  a 
note  or  any  one  acting  for  him  may  make  the  demand 
for  payment  and  send  notice  of  dishonor  to  the  in- 
dorsers.  Usually  the  holder  or  his  agent  notifies  all 
the  parties  on  the  note.  This  is  the  most  business-like, 
as  well  as  the  most  prudent  way,  as  it  renders  all  par- 
ties responsible  to  him,  and  each  responsible  to  each 
other  in  their  order.  Extending  time  of  payment  by 
the  holder  releases  the  indorsers  of  the  note,  unless 
consent  to  such  extension  has  been  given  by  the  in- 
dorsers. 

The  finder  of  a  note,  as  of  all  other  property,  must 
make  reasonable  efforts  to  find  the  owner,  before  he  is 
entitled  to  appropriate  it  for  his  own  purposes.  If  the 
finder  conceal  it,  he  is  liable  to  the  charge  of  larcency 
or  theft. 

Interest. — A  note  which  does  not  state  on  its  face 
that  it  bears  interest,  will  bear  interest  only  from  ma- 
turity. If  the  words  "with  interest"  are  included  in  a 
note  it  draws  the  legal  rate  of  interest  from  the  date  of 
making,  but  if  the  note  is  to  draw  a  rate  of  interest 
higher  than  the  legal,  but  not  higher  than  the  statute 
of  the  state  allows,  the  rate  of  interest  must  be  speci- 
fied. 

Death  of  a  Holder.— After  the  death  of  a  holder  of 
a  negotiable  note,  his  executor  or  administrator  may 
transfer  it  by  his  indorsement. 

When  Right  of  Action  Expires.— The  statute  of  limi- 
tations begins  to  run  from  the  day  the  right  of  action 
accrues.    See  Interest  Laws  and  Statutes  of  Limitation, 


BUSINESS    LAW,  13 

Checks. — A  written  order  on  a  bank  directing  a  cer- 
tain amount  of  money  to  be  paid  to  a  person  named, 
or  to  his  order,  or  to  him  "or  bearer,"  or  simply  to 
"bearer,"  is  called  a  check.  This  is  the  simplest  form 
of  negotiable  paper  and  requires  no  set  form  of  word- 
ing; any  intelligibly  written  demand,  dated,  made  by  a 
depositor,  correctly  signed,  is  a  check  and  will  draw  the 
money. 

Forged  Checks. — A  bank  pays  every  check  at  its  own 
risk,  and  in  case  of  the  payment  of  a  forged  check,  must 
stand  the  loss. 

Certified  Check. — A  check  is  said  to  be  "certified" 
when  it  bears  the  signature  of  the  cashier  or  other 
competent  oflacer,  together  with  the  word  "certified," 
thus  signifying  that  the  bank  guarantees  the  check. 
The  amount  for  which  it  is  drawn  is  immediately  de- 
ducted from  the  drawer's  account. 

"With  Exchange." — Checks  drawn  with  the  words 
"with  exchange"  after  the  amount  in  writing  are  usually 
cashed  without  extra  charge  by  the  bank  at  which  pre- 
sented, the  cost  of  collection  being  paid  by  the  drawer. 
Banks  usually  discourage  the  use  of  these  checks. 

Kinds  of  Indorsement. — Following  are  the  various 
kinds  of  indorsement:  An  indorseTnent  in  hlanlc  names 
no  indorser,  and  is  payable  to  bearer.  A  special  irir 
dorseinent  specifies  the  party  whose  indorsement  is  es- 
sential to  the  negotiability  of  the  instrument  A  re- 
strictive indorsement  is  one  designating  one  party  and 
no  other  to  whom  the  paper  shall  be  paid,  or  one  use 
to  which  it  shall  be  put,  as  "Pay  A  only,"  or  "For  de- 
posit only  in  the  Citizens'  National  Bank."  A  qualified 
indorsement  is  one  including  the  words  "without  re- 
course," or  its  equivalent,  so  limiting  the  usual  liability 
of  the  indorser.  A  conditional  indorsement  is  one  di- 
recting payment  contingent  upon  a  certain  occurrence. 

Kinds  of  Drafts. — A  sight  draft  is  one  drawn  by  one 
person  on  another  and  payable  when  presented  or  at 
sight.  Time  drafts  are  similar  to  sight  drafts,  but  are 
drawn  payable  a  certain  number  of  days  after  presenta- 
tion and  require  acceptance  by  the  party  against  whom 
they  are  drawn.  Such  draft  must  be  accepted  by  the 
drawee   who   signs  his  name  across  the  face,   accom- 


14  BUSINESS    MAN'S    ENCYCLOPEDIA. 

panled  by  the  word  "accepted,"  thus  making  it  the  same 
to  all  intents  and  purposes  as  a  promissory  note.  It 
matures  so  many  days  after  acceptance,  not  after  the 
date  on  which  it  is  drawn.  A  bank  draft  is  the  order  of 
one  bank  to  pay  a  certain  person  a  given  sum,  and  is 
the  most  convenient  method  of  transferring  money. 

PARTNERSHIP 

Nature  and  Formation. — A  partnership  Is  the  con- 
tract relation  subsisting  between  persons  who  have 
combined  their  property,  labor  or  skill  in  a  lawful  en- 
terprise or  business  for  their  common  profit.  The  part- 
ners make  up  the  firm  which  is  commonly  held  to  be 
an  entity  the  same  as  a  corporation,  though  the  law 
generally  regards  the  partners  as  joint  owners  of  the 
firm  property. 

Kinds  of  Partnership. — A  general  partnership  is  one 
in  which  the  parties  thereto  agree  to  enter  into  a  spe- 
cified business,  no  limitations  or  conditions  being  fixed. 
A  special  or  limited  partnership  is  one  in  which  there 
may  be  general  partners  with  unlimited  liability  and 
special  partners  whose  liability  is  limited  upon  the 
compliance  with  certain  requirements. 

Kinds  of  Partners. — An  ostensible  partner  is  one  who 
Is  known  to  the  world  as  such.  A  secret  partner  is  one 
who  is  not  openly  or  generally  so  declared.  He  is  not 
liable  for  debts  contracted  after  his  retirement,  al- 
though he  has  given  no  notice  of  the  same.  A  dormant 
or  silent  partner  is  one  who  takes  no  part  in  the  trans- 
action or  control  of  the  business,  but  shares  in  the 
profits  and  losses  according  to  certain  agreements.  A 
nominal  partner  is  held  out  to  the  world  as  such  with- 
out actually  participating  in  the  profits  and  losses  of 
the  business. 

Formation  of  Partnersliips. — All  persons  who  are 
legally  competent  to  do  business  for  themselves  may 
enter  into  partnership  which  may  be  formed  by  a  mere 
verbal  agreement  and  stand  in  law,  but  a  written  agree- 
ment is  the  one  to  be  preferred.  The  parties  may  agree 
as  they  please  as  to  sharing  profits  or  losses,  but  in 
the  absence  of  writing  to  prove  the  contrary  the  law 


BUSINESS    LAW.  15 

will  assume  that  partners  share  profits  and  losses  equal- 
ly. The  articles  of  agreement  should  be  drawn  up  with 
special  care  in  writing  the  details  of  conditions,  liabili- 
ties and  proportionate  share  of  profits  or  loss  fully 
stated. 

How  Soon  a  Partnership  is  in  Force. — It  is  presumed 
that  a  partnership  commenced  at  the  time  the  articles 
of  copartnership  are  drawn  unless  otherwise  stated. 

Use  of  Name  in  PartnersFiip. — ^When  a  partner  with- 
draws from  a  firm,  but  allows  his  name  to  be  used  as 
before,  or  if  one  lends  his  name  to  a  firm,  in  either  case 
he  is  held  responsible  to  third  persons  as  a  partner. 

Suing  Partners. — It  is  generally  supposed  that  one 
partner  cannot  sue  another.  This  is  not  wholly  true. 
A  partner  can  sue  for  a  balance  due  him  after  settle- 
ment of  general  accounts  or  for  a  balance  dite  him  on 
some  specific  account.  It  is,  however,  best  to  appeal  to 
a  court  of  equity,  for  that  court  can  do  for  partnership 
what  the  law  cannot  do. 

DISSOLUTrON    OF    PARTNERSHIP- 

A  partnership  may  be  dissolved  by  mutual  consent, 
by  expiration  of  predetermined  time,  by  death  of  one 
of  the  partners,  by  insanity,  by  the  bankruptcy  of  either 
partner,  or  by  the  court  for  any  good  cause,  such  as  dis- 
honesty of  one  partner  against  the  rest,  or  incapacity 
caused  by  habitual  drunkenness  or  conviction  of  any 
crime.  A  partner  may  withdraw  at  any  time  if  no  time 
for  the  continuation  of  the  partnership  is  mentioned  in 
the  articles  of  agreement,  but  he  must  give  due  notice 
of  his  intention  to  the  other  partners.  If  the  time  for 
the  continuance  of  the  partnership  is  mentioned,  a  part- 
ner can  nevertheless  withdraw  at  any  time,  but  he  is 
responsible  to  the  firm  for  damages  caused  by  the 
breach  of  his  promise.  If  a  partner  dies  the  surviving 
partners  alone  have  the  right  to  settle  up  the  business. 
To  his  heirs  and  legal  representatives  they  need  only 
to  render  an  account  of  the  business. 

Notice  to  be  Given. — Upon  the  dissolution  of  a  part- 
nership by  mutual  consent  it  should  be  indorsed  on  the 
articles  of  copartnership  and  a  notice  given  in  some 


16  BUSINESS    MAN'S    ENCYCLOPEDIA, 

prominent  newspaper.  Special  notice  should  also  be 
sent  to  each  one  of  the  creditors  of  the  firm. 

Authority  of  Partners. — As  a  general  rule  the  whole 
firm  and  each  member  of  it  is  bound  by  the  acts  and 
contracts  of  one  partner,  because  in  law  the  act  or 
contract  of  one  is  regarded  as  the  act  of  all.  Each  is 
regarded  as  the  agent  of  all  without  any  express  au- 
thority being  given.  Thus,  loans,  purchases,  sales,  as- 
signments, pledges,  or  mortgages  effected  by  one  part- 
ner on  the  partnership  account,  and  with  good  faith 
in  the  third  party,  are  binding  on  all  the  firm.  So  is 
also  release  by  one  a  release;  notice  to  one  is  notice 
to  all;  demand  of  one  is  demand  of  all.  In  matters, 
however,  not  connected  with  the  partnership,  but  in- 
tended for  his  own  personal  interests,  the  firm  is  not 
bound. 

Liability  of  the  Several  Partners. — For  the  payment 
of  partnership  debts  the  property  of  the  firm,  both  real 
and  personal,  as  also  that  of  each  individual  partner, 
is  held  responsible  for  amount  of  the  unpaid  partner- 
ship debt. 

Individual  Debts  of  Partners. — A  partner  having  in- 
dividual debts  makes  the  firm  liable  for  such  debts  for 
his  interest  in  the  firm  after  the  firm  debts  are  de- 
ducted, the  firm  liabilities  always  having  precedence. 

Liabilities  of  a  New  Partner. — A  new  partner  enter- 
ing a  firm  cannot  be  held  for  firm  debts  contracted  prev- 
ious to  his  admission. 

Sale  of  Partner's  Interest. — An  assignment  of  inter- 
est by  one  partner  must  be  assented  to  by  the  other 
partner  or  partners. 

BANKS  AND  BANKING 

A  bank  is  an  institution  organized  for  the  purpose 
of  receiving  deposits  of  money,  making  loans,  discount- 
ing paper,  making  collections,  and  effecting  the  trans- 
mission of  money  from  one  place  to  another. 

Different  Classes  of  Banks. — Banks  are  divided  gen- 
erally to  five  classes:  Banks  of  deposit,  of  discount,  of 
circulation,  of  exchange,  and  savings  banks.  Banks  of 
deposit  receive  money  to  keep  for  the  depositor  until 


BUSINESS    LAW.  17 

he  draws  it  out,  by  checks  payable  to  himself  or  to 
others.  Banks  of  discount  are  occupied  in  discounting 
promissory  notes  and  bills  of  exchange,  or  in  lending 
money  on  security.  Banks  of  circulation  issue  bills  or 
notes  of  their  own,  intended  to  be  the  circulating  cur- 
rency or  medium  of  exchange,  instead  of  gold  and 
silver.  The  notes  or  bills  of  national  banks  are  guar- 
anteed by  the  government,  which  holds  as  security 
bonds  belonging  to  the  bank  to  a  still  larger  amount 
than  their  issue  of  bills,  or,  as  commonly  termed,  their 
^'circulation."  The  government  also  retains  a  five  per 
cent  fund  for  immediate  redemption.  Banks  of  ex- 
change receive  money  on  deposit,  and,  instead  of  pay- 
ing it  back  to  the  depositors,  make  payments  by  drafts 
on  other  banks.  They  keep  money  on  deposit  at  the 
principal  trade  centers;  thus  money  can  be  sent  to 
different  points  at  small  expense  and  without  risk. 
They  charge  one  who  desires  to  remit,  a  small  amount 
for  their  services,  and  sell  him  their  draft  on  the  place 
to  which  the  remittance  is  to  be  sent.  Savings  hanks 
make  a  specialty  of  receiving  for  deposit  relatively 
small  sums  of  money,  paying  a  small  rate  of  interest 
thereon. 

A  bank  may  combine  two  or  more  functions  of  banks 
described  above,  being  at  the  same  time  a  bank  of  de- 
posit and  discount,  etc.  Savings  banks  are  usually  a 
department  of  a  bank  of  circulation  or  exchange. 

PRIVATE   BANKS. 

Organization. — Private  banks  are  organized  in  the 
same  manner  as  ordinary  partnerships.  They  may  be- 
long to  an  individual  or  a  firm. 

Functions. — The  business  of  private  banks  varies  in 
different  localities.  In  many  cases  they  possess  the 
principal  functions  of  national  banks;  in  other  cases 
their  attention  is  directed  only  to  special  features  of 
banking  such  as  the  buying  and  selling  of  foreign  ex- 
change, stocks  and  bonds,   etc. 

Protection  to  Creditors. — In  a  few  states  private 
banks  are  restricted  in  their  operations  by  statute,  in 
which  case  they  are  subject  to  the  inspection  of  state 


18  BUSINESS    MAN'S    ENCYCLOPEDIA. 

oflacials,  but  usually  their  operations  are  regulated  and 
restricted  only  by  the  common  laws  of  business. 

STATE   BANKS. 

How  Organized. — State  banks  are  organized  under 
the  laws  of  the  state  in  which  they  are  located,  the 
preliminary  steps  being  much  the  same  as  those  in 
organizing  national  banks. 

Circulating  Notes. — Prior  to  July  1,  1866,  state  banks 
issued  notes  which  circulated  as  money,  but  on  that 
date  the  government  imposed  a  tax  of  10  per  cent  on 
the  circulation  of  all  state  banks,  which  had  the  effect 
of  withdrawing  the  circulation,  as  the  rate  was  to  high 
to  allow  any  profit  to  the  banks. 

Difference  Between  State  and  National  Banks. — Na- 
tional banks  are  organized  under  the  National  Bank 
Act,  are  under  the  supervision  of  the  general  govern- 
ment and  alone  issue  circulating  notes,  while  state 
banks  are  organized  under  the  laws  of  the  various 
states,  are  subject  to  the  state  statutes,  and  do  not 
issue  circulating  notes.  The  advantages  claimed  by 
state  over  national  banks  is  that  they  are  not  re- 
stricted so  closely  in  their  business  methods  as  na- 
tional banks. 

NATIONAL   BANKS. 

A  national  bank  is  a  bank  organized  under  an  act 
passed  by  Congress,  entitled  "The  National  Bank  Act," 
and  in  addition  to  doing  a  general  banking  business,  it 
has  authority  to  issue  circulating  notes  against  bonds 
deposited  with  the  Treasurer  of  the  United  States.  The 
government  does  not  own  nor  control  the  bank,  but 
only  authorizes  its  creation  and  prescribes  the  mode 
of  doing  business.  Every  banking  association  doing 
business  under  this  act  is  governed  by  the  same  prin- 
ciples, is  subject  to  the  same  inspection,  uses  the  same 
forms  in  making  reports  to  the  comptroller  at  Wash- 
ington, and  is  liable  to  the  same  penalties  for  the  vio- 
lation of  any  requirement  of  the  national  banking  law. 

Powers. — National  banks  have  power  to  adopt  and 
use  a  corporate  seal;  to  have  succession  for  a  period 
of  twenty  years;    to  make  contracts;    to  sue  and   be 


BUSINESS    LAW.  19 

sued;  to  elect  directors,  and  by  its  board  of  directors 
to  elect  officers;  to  make  all  needful  by-laws  not  in  con- 
sistent with  the  national  bank  act;  to  discount  and  ne- 
gotiate notes,  drafts,  bills  of  exchange,  etc.;  to  receive 
deposits,  buy  and  sell  exchange,  coin  and  bullion;  to 
loan  money  on  personal  security;  and  to  issue  and  cir- 
culate its  own  notes. 

Stockhalder's  Liability. — The  liability  of  each  stock- 
holder of  a  national  bank  is  to  the  par  value  of  stock 
owned,  in  addition  to  the  amount  invested  in  such 
stock. 

Real  Estate. — ^National  banks  are  prohibited  from 
holding  real  estate  other  than  the  buildings  in  which 
they  do  business  and  land  mortgaged  to  secure  a  loan 
which  was  made  in  good  faith  upon  personal  security. 

Reserve. — National  banks  are  required  to  keep  on 
hand  at  all  times  a  lawful  money  reserve  equaling  25 
per  cent  of  the  deposits  if  in  a  large  city,  and  15  per 
cent  of  the  deposits,  if  located  in  a  small  city. 

Overcertifying  Checks. — National  banks  are  pro- 
hibited under  severe  penalty  from  certifying  a  check  in 
excess  of  a  depositor's  account. 

Surplus.— Each  national  bank  shall  accumulate  a  sur- 
plus by  setting  apart  one-tenth  of  its  net  profits  before 
declaring  any  dividend,  until  the  surplus  equals  20  per 
cent  of  the  capital  stock. 

Reports  to  Comptroller. — Banks  must  make  at  least 
five  reports  to  the  comptroller  during  the  year. 

LOAN  AND  TRUST  COMPANIES. 

How  Organized. — Loan  and  trust  companies  are  or- 
ganized by  a  number  of  persons,  usually  ten  or  more, 
under  the  laws  of  the  various  states. 

Kinds  of  Business  Transacted. — These  companies 
usually  receive  deposits  and  make  loans,  but  as  a  rule 
they  do  not  undertake  the  collection  of  commercial 
paper.  They  act  as  agents  for  corporations  in  trans- 
ferring stocks  and  bonds,  make  investments,  collect  in- 
terest, act  as  trustees,  receivers,  executors,  administra- 
tors, etc.  Many  companies  have  boxes  in  fire  and  burg- 
lar proof  safes  which  they  rent  to  customers  desiring 


20  BUSINESS    MAWS    ENCYCLOPEDIA, 

a  safe  place  for  tlie  keeping  of  valuable  papers,  etc.; 
others  make  a  business  of  examining  and  insuring  titles 
to  real  estate. 

Clearing  Houses. — A  clearing  house  is  the  place 
where  the  representatives  of  certain  banks,  associated 
for  the  purpose,  meet,  and,  under  the  supervision  of  a 
committee  or  officers  selected  by  the  members,  settle 
their  accounts  with  one  another  and  make  and  receive 
payment  of  balances. 

Each  bank  in  its  daily  dealings  receives  many  bills 
of  other  banks,  and  checks  drawn  on  them,  so  that  at 
the  close  of  the  day's  business  every  bank  has  in  its 
drawers  various  sums  due  to  it  by  other  banks.  It  is, 
in  like  manner,  the  debtor  of  other  banks  which  have 
received  its  bills  and  checks.  These  sums  due  by  and 
to  the  banks  among  themselves  are  at  the  clearing 
house  set  off  against  each  other  and  the  balances  paid 
or  received. 

AGENCY 

Agency  is  the  relation  existing  between  two  or  more 
persons,  arising  out  of  a  contract  giving  authority  to 
one  to  represent  the  other  in  business  transactions.  A 
person  who  so  represents  another  is  called  an  "agent;" 
the  one  whom  he  represents  is  known  as  the  "prin- 
cipal." 

How  Created. — The  contract  which  creates  the 
agency  may  be  a  formal  writing  under  seal,  as  a  power 
of  attorney,  or  it  may  be  a  written  agreement,  or  a 
letter  of  instructions,  or  a  verbal  agreement  or  ap- 
pointment, or  it  may  be  implied  from  facts  and  cir- 
cumstances. 

Who  IVIay  Act  as  Principal  or  Agent. — Any  one  who 
is  competent  to  do  business  for  himself  may  act  as 
principal,  and  appoint  an  agent  to  transact  it  for  him. 
Persons  who  cannot  do  business  for  themselves  may, 
however,  be  appointed  to  act  as  agents.  Therefore 
minors  and  married  women  may  act  as  agents. 

Extent  of  Authority. — The  employing  of  an  agent 
is  the  act  which  gives  him  his  authority.     An  agent 


BUSINESS    LAW.  21 

has  authority  to  do  whatever  is  necessary  or  generally 
done  in  connection  with  the  purposes  for  which  he  is 
employed. 

Kinds  of  Agency. — There  are  several  kinds  of  agency, 
the  first  division  of  which  is  into  special  and  general; 
second,  limited  and  unlimited;  third,  factor  and  broker. 
A  special  agency  is  an  agency  to  do  a  single  act.  A 
general  agency  is  one  in  which  the  agent  is  delegated 
authority  to  do  anything  about  a  particular  business.^ 
Limited  agency  is  one  in  which  the  agent  is  bound  by 
particular  instructions,  and  applies  to  a  general  agent, 
restricting  his  authority.  Unlimited  agency  is  the  power 
of  a  special  agent,  giving  him  authority  to  use  any  means 
he  may  find  necessary  to  accomplish  the  thing  to  be 
done.  A  factor  is  one  who  has  the  property  of  his  prin- 
cipal ill  his  own  possession  for  sale,  and  is  commonly 
termed  a  commission  merchant.  A  broker  is  one  em- 
ployed to  negotiate  sales  between  the  buyer  and  the 
seller.  He  does  not  have  possession  of  the  goods  or 
property  which  he  negotiates,  nor  has  he  any  authority 
to  sell  in  his  own  name. 

Liability  of  Principal. — The  principal  is  responsible 
for  the  acts  of  his  agent  committed  in  the  execution  of 
the  agency  and  which  are  within  the  real  or  apparent 
scope  of  the  principal's  business.  A  distinction  is  here 
made  between  a  special  and  a  general  agent.  If  a 
special  agent  exceeds  or  disobeys  his  instructions  the 
principal  is  not  liable;  but  if  a  general  agent  exceeds 
his  authority  the  principal  will  be  bound,  if  the  act  is 
within  the  apparent  scope  of  an  agent's  authority,  when 
it  is  such  an  act  as  is  natural  and  usual  in  transacting 
business  of  that  kind.  By  appointing  him  to  do  that 
business,  the  principal  is  considered  as  saying  to  the 
world  that  his  agent  has  all  the  authority  necessary  to 
transact  it  in  the  usual  way.  For  any  criminal  act,  how- 
ever, of  the  agent,  the  principal  is  not  responsible  un- 
less  he  directly  commands  him  to   commit  it. 

Wrongful  Acts  of  Agents. — In  case  of  wrongs  and 
injuries  (torts),  the  general  rule  is  that  the  principal  is 
liable  to  third  persons  for  the  wrongful  acts  of  the 
agent  when  acting  within  the  scope  of  his  agency.    But 


22  BUSINESS    MAN'S    ENCYCLOPEDIA. 

this  does  not  relieve  the  agent  of  personal  liability  him- 
self. 

The  Agent's  Liability. — (1)  To  Ms  Prinoipah  An 
agent  is  bound  in  transacting  the  affairs  of  his  princi- 
pal to  exercise  all  the  care  which  a  reasonable  man 
Would  exercise  in  his  own,  and  to  the  utmost  good 
faith.  For  any  loss  to  the  principal  through  neglect  or 
unfaithfulness,  the  agent  is  liable  to  him.  (2)  To  the 
Third  Party,  If  an  agent  conceals  his  character  as  an 
agent,  or  transcends  his  authority,  or  otherwise  so 
conducts  himself  as  to  make  his  principal  responsible, 
or  if  he  expressly  binds  himself  in  any  way,  he  is  him- 
self liable  to  the  third  party. 

Accounting. — The  principal  may  call  his  agent  to  an 
account  at  any  time,  and  may  recover  full  indemnity 
for  all  injuries  sustained  by  reason  of  the  positive  mis- 
conduct or  negligence  of  the  agent,  or  by  his  transcend- 
ing his  authority.  An  agent  is  not  liable  to  his  prin- 
cipal for  not  accounting  until  demand,  which  demand 
should  be  made  at  his  residence,  and  sufficient  oppor- 
tunity given  him  for  payment. 

Compensation. — As  against  the  principal,  an  agent 
is  entitled  to  compensation  for  his  services,  and  reim- 
bursement for  the  expenses  of  his  agency,  and  for  per- 
sonal loss  or  damage  in  properly  transacting  the  busi- 
ness thereof. 

Sub-Agents. — An  agent  may  himself  appoint  another 
agent  and  act  through  him.  Such  a  person  is  called  a 
sub-agent,  and  is  responsible  to  him  who  has  appointed 
him,  as  his  principal.  In  most  commercial  transactions 
sub-agents  may  be  employed. 

IVIixing  Property. — If  an  agent  mixes  his  own  prop- 
erty with  that  of  his  principal,  so  that  it  cannot  be 
identified,  it  will  all  belong  to  the  principal. 

Responsibility  to  Third  Party. — Ordinarily  a  person 
can  only  be  responsible  for  his  own  acts,  but  an  agent's 
act  is  really  considered  as  that  of  his  principal.  There- 
fore the  rule  is  that  the  principal  is  responsible  for  the 
acts  of  his  agent.  The  principal  is  bound  even  though 
he  was  unknown  at  the  time  the  act  was  done,  because 
he  is  supposed  to  derive  the  benefit  of  the  same. 


BUSINESS    LAW.  23 

Notice  to  Agent. — A  notice  to  an  agent  is  generally- 
considered  notice  to  the  principal,  but  to  have  that  ef- 
fect, it  must  have  relation  to  the  agency  business,  and 
come  within  its  scope.  It  must  also  be  at  the  time  he 
is  acting  as  agent  in  relation  to  the  very  thing  about 
which  the  notice  is  given. 

Dissolution  of  Agency. — There  are  three  ways  in 
which  an  agency  may  be  dissolved:  (1)  By  a  revoca- 
tion of  the  power  of  the  agent  by  the  principal; 
(2)  by  a  renunciation  of  power  by  the  agent;  (3)  by 
operation  of  law. 

Revocation. — This  may  take  place  at  any  time  the 
principal's  authority  has  not  been  executed  in  any  part; 
at  such  time  as  desired  by  the  principal  if  there  is  an 
express  agreement  that  it  shall  be  revocable;  or  at 
such  time  as  such  revocation  will  not  work  a  hardship 
upon  the  agent. 

Renunciation. — The  'agent  can  renounce  the  author- 
ity of  the  principal  at  any  time,  but  not  without  mak- 
ing himself  liable  to  the  principal  for  all  the  damages 
and  losses  he  sustains  in  consequence  of  the  renuncia- 
tion, except  where  it  is  a  gratuitous  and  purely  volun- 
tary agency. 

Operation  of  Law. — An  agency  may  be  terminated  by 
operation  of  law:  (1)  By  lapse  of  time,  as  where  it  was 
created  for  a  year  and  the  year  expires;  (2)  by  change 
in  the  condition  of  either  party  producing  incapacity 
to  act. 

CORPORATIONS 

A  corporation  is  an  association  of  individuals  au- 
thorized by  law  to  act  under  a  corporate  name  as  a 
legal  being.  It  is  by  far  the  most  convenient  and  effect- 
ive form  of  combination  where  a  number  of  persons 
wish  to  unite  their  efforts,  their  resources,  or  any  part 
of  either  for  some  common  purpose.  Hence  there  are 
corporations  of  many  kinds,  business,  municipal,  re- 
ligious, charitable,  educational  and  others,  each  with 
features  neculiar  to  itself.  The  business  corporation 
and  the  usages  relating  to  it  are  of  recent  growth  and 
were  called  into  being  to  avoid  the  many  and  serious 
disadvantages  of  the  common  partnershipo 


24  BUSINESS    MAWS    ENCYCLOPEDIA. 

Incorporation  and  Copartnership. — There  are  prac- 
tically only  two  ways  in  which  persons  can  associate 
themselves  for  business  purposes,  incorporation  and  co- 
partnership. The  great  advantages  of  incorporation 
are:  (1)  The  limited  liability  of  stockholders  in  case 
of  the  insolvency  of  the  corporation;  (2)  the  ease  and 
simplicity  with  which  an  interest  in  the  business  is 
acquired  or  disposed  of  by  the  purchase  or  sale  of 
stock  certificates;  its  permanency,  notwithstanding  the 
change,  death  or  insolvency  of  its  members. 

Tine  Business  Corporation. — A  business  corporation 
is  one  formed  to  carry  on  some  manufacturing,  mining, 
or  mercantile  enterprise.  In  New  York,  transportation, 
banking,  and  insurance  companies  are  excluded  from 
this  classification  and  have  laws  and  usages  of  their 
own.  In  most  of  the  other  states  the  same  distinction 
exists,  although  not  so  sharply  outlined.  The  restricted 
application  of  the  term  "business  corporation,"  makes 
the  laws  relating  to  it  comparatively  well  defined  and 
easily  understood.  While  details  may  vary  in  the  dif- 
ferent states,  the  general  system  is  the  same  in  all. 
The  general  characteristics  of  the  business  corpora- 
tion or  company  are  as  follows:  (1)  It  is  created  by 
a  charter  granted  by  the  state  and  cannot  come  into 
existence  by  mere  agreement  among  its  members.  Its 
peculiar  advantages  can  be  had  only  through  a  charter, 
and  this  charter  is  secured  by  following  the  forms 
prescribed  by  the  state  laws.  (2)  It  has  a  stock  capi- 
talization divided  into  shares — usually  of  a  like  amount 
— and  evidenced  by  transferable  certificates  of  stock. 
These  are  issued  to  its  members — termed  stockholders. 
(3)  The  liability  of  the  stockholders  is  limited  to  the 
amount  of  their  subscriptions  to  its  stock,  and  after 
this  has  been  once  paid,  no  further  claim  can  be  made 
upon  either  of  them  by  the  corporation  or  its  creditors 
— though  there  are  minor  exceptions  to  this  general 
rule. 

The  Charter. — A  charter,  or  certificate  of  incorpora- 
tion (the  terms  are  equivalent),  authorized  by  the 
state,  is  necessary  to  create  a  corporation.  It  is  an  in- 
strument granting  to  certain  specified  persons  and  their 
successors  the  right  of  acting  as  a  corporate  being  or 


BUSINESS    LAW,  25 

corporation.  Under  general  laws  all  applicants  com- 
plying with  the  prescribed  forms  and  requirements  may 
become  incorporated  for  any  of  the  usual  business  pur- 
poses. An  individual  or  firm  may  do  anything  not  for- 
bidden by  the  law  but  a  corporation  has  no  such  legal 
right.  If  it  were  incorporated  to  manufacture  bicycles, 
it  could  not  lawfully  without  amendment  of  charter,  un- 
dertake the  manufacture  of  automobiles.  Any  contract 
made  by  a  corporation  in  excess  of  its  charter  powers 
cannot  be  enforced  in  the  courts  and  the  execution  of 
the  same  might  be  prevented  by  injunction  at  the  suit 
of  any  of  its  stockholders.  As  a  matter  of  fact  and 
ordinary  practice  corporations  do  go  beyond  their  pow- 
ers very  frequently,  and  unless  some  stockholder  or 
creditor  of  the  company  objects,  the  state  alone  has  the 
right  to  interfere.  Also,  of  late  years,  particularly  with- 
in the  states  of  New  York,  New  Jersey,  Delaware  and 
West  Virginia,  so  much  latitude  is  allowed  in  specify- 
ing charter  powers  that  almost  any  possible  contract 
would  be  within  the  charter  bounds. 

Charter  Powers. — A  modern  business  corporation 
under  a  liberal  charter  will  have  all  the  following  pow- 
ers: (1)  To  have  continuity  of  existence  under  its  cor- 
porate name  for  the  term  stated  in  its  charter;  (2)  to 
litigate,  to  sue  and  be  sued,  in  all  respects  as  an  in- 
dividual; (S)  to  use  a  corporate  seal;  (4)  to  buy,  sell 
and  hold  property,  real  and  personal,  as  may  be  neces- 
sary or  convenient  in  its  business;  (5)  to  appoint  di- 
rectors, officers,  and  agents  to  manage  and  conduct  its 
affairs;  (6)  to  make  by-laws  for  the  management  of 
its  affairs  and  the  conduct  of  its  business;  (7)  to  have 
a  capital  stock,  divided  into  transferable  shares — usually 
of  equal  amount;  (8)  to  dissolve  itself;  (9)  to  carry 
on  its  special  business. 

Application  for  Charter. — The  first  step  in  organiz- 
ing a  business  corporation  is  to  prepare  the  formal  ap- 
plication for  incorporation.  While  the  details  of  this 
vary  in  each  state,  the  essential  features  are  the  same. 
The  parties  applying  must  be  able  to  contract.  They 
must  be  natural  persons^  hence  a  corporation,  being  an 
artificial  person,  could  not  join  in  an  application  to 
charter  another  corporation.     Some  states  impose  re 


26  BUSINESS    MAN'S    ENCYCLOPEDIA. 

strictions  as  to  citizenship.  In  some  states  but  three 
persons  need  join;  in  others  five  or  more  are  required. 
The  essential  features  of  the  application  are  as  follows: 
(1)  The  name  of  the  corporation;  (2)  the  location  of 
the  principal  oflSce  or  place  of  business;  (3)  the  object 
or  objects  of  the  corporation;  (4)  the  amount  of  the 
capital  stock;  (5)  the  names  and  addresses  of  sub- 
scribers and  amounts  subscribed  by  each;  (6)  the 
duration  of  the  charter;    (7)   any  special  provisions. 

Liability. — Corporations  are  liable  for  contracts  made 
by  their  duly  authorized  agent  within  the  scope  of  his 
authority,  as  well  as  for  trespasses  or  torts  committed 
by  such  agent  under  authority  of  such  corporations. 

Directors  of  a  corporation  are  liable  to  the  stock- 
holders whenever  there  has  been  gross  negligence  or 
fraud,  but  not  for  unintentional  errors. 

The  stockholders  are  individually  liable  to  the  cor- 
poration's creditors  to  extent  fixed  by  statute  under 
which  the  company  is  incorporated.  Usually  they  are 
not  made  liable  beyond  the  amount  of  stock  held  by 
them. 

CAPITAL  STOCK. 

The  capital  stock  of  a  company  is  the  amount,  as 
estimated  by  the  incorporators,  required  for  the  pur- 
poses of  the  business.  Authorized  and  fixed  by  the 
charter,  it  can  be  changed  only  by  amendment  of  that 
instrument.  It  is  divided  into  shares,  the  face  value 
of  which  is  usually  one  hundred  dollars,  though  the 
matter  is  discretional  with  the  incorporators  and  other 
amounts  are  often  chosen.  Generally  the  state  laws 
require  that  a  certain  minimum  amount  of  the  capital 
stock  be  subscribed  and  in  some  states  paid  in,  before 
the  corporation  may  begin  business;  thereafter  addi- 
tional stock  may  be  issued  as  required,  up  to  the  charter 
limit 

Unissued  Stock.— This  is  in  itself  a  nullity,  it  Is 
merely  the  right  to  issue  stock  if  subscribers  can  be 
found,  and  until  so  issued  represents  nothing. 

Issued  and  Outstanding  Stock. — This  is  stock  actu- 
ally subscribed  for  and  the  subscriptions  accepted  by 


BUSINESS    LAW,  27 

the  company,  and,  usually,  for  which  stock  certificates 
have  been  duly  made  out  and  delivered  to  the  sub- 
scribers. It  is  a  liability  of  the  company  and  the  sub- 
scriptions or  the  cash  and  property  received  should  be 
an  equivalent  asset. 

Full  Paid  Stock. — Stock  which  has  been  subscribed, 
issued,  and  fully  paid  is  termed  full  paid  stock,  and 
the  words  **Full-paid  and  Non-assessable"  should  always 
appear  plainly  printed  upon  the  face  of  its  certificates. 

Treasury  Stock. — This  term  is  commonly  but  er- 
roneously applied  to  unissued  stock,  or  even  to  stock 
subscribed  but  unpaid.  Strictly  speaking,  it  is  such 
stock  which  has  been  issued,  paid  for — usually  in  full — 
and  then  by  gift  or  purchase  has  come  back  into  pos- 
session of  the  company.  It  may  be  taken  in  the  name 
of  the  treasurer,  or  of  a  trustee,  or  may  be  held  in  the 
name  of  the  corporation  itself.  In  either  case  it  is 
accounted  an  asset  of  the  company  and  may  be  held 
or  sold  at  the  discretion  of  the  board  of  directors. 
When  sold  below  par  the  purchaser  incurs  no  liability, 
for  the  stock  if  once  full  paid,  remains  so.  So  long  as 
held  by  the  company,  it  can  neither  vote  nor  participate 
in  dividends,  but  remains  lifeless  and  without  rights  or 
powers.  It  is  issued  stock,  but,  being  in  the  treasury,  is 
not  outstanding  stock.  This  distinction  does  not,  how- 
ever, exempt  such  stock  from  the  franchise  taxes  im- 
posed under  the  laws  of  certain  states,  as  New  Jersey 
and  Delaware. 

Common  Stock. — Stock  issued  without  special  privi- 
leges or  restrictions — general  or  ordinary  stock — is  em- 
braced in  the  term  common  stock.  Unless  special  stock 
of  some  kind  is  issued  by  the  company,  all  its  stock  is 
common  stock.  The  owner  of  common  stock  has  the 
right  to  attend  and  vote  at  all  meetings  of  stockholders, 
to  share  in  the  profits  of  the  business,  and  on  the  dis- 
solution of  the  company,  to  have  his  due  proportion  of 
the  final  assets. 

Preferred  Stock. — This  is  a  stock  issued  under  an 
agreement  that  it  is  to  receive  a  stated  dividend  from 
the  profits  before  anything  is  allotted  to  the  common 
stock.    It  is  sometimes  called  guaranteed  stock,  though 


28  BUSINESS    MAWS    ENCYCLOPEDIA, 

this  term  is  more  properly  applied  to  stock  issued  by 
one  company  with  a  certain  dividend  guaranteed  by  an- 
other company. 

Preferred  stock,  unlike  a  bond,  does  not  in  any  way 
represent  a  debt  or  liability  of  the  corporation.  It  is 
merely  an  investment;  its  owners  are  but  stockholders; 
its  dividends,  while  payable  before  anything  is  given 
the  common  stock,  may  be  paid  only  out  of  profits,  and 
the  failure  of  dividends  gives  no  ground  of  action 
against  the  corporation.  For  these  reasons  preferred 
stock,  if  it  can  be  sold,  is  much  preferable  to  bonds  as 
a  means  of  raising  money.  Should  the  corporation  be- 
come insolvent,  usage  as  to  preferred  stock  is  not  uni- 
form. Under  the  laws  of  New  Jersey  and  certain  other 
states,  should  the  assets  be  sufficient,  it  is  redeemed  at 
its  face  value,  after  the  debts  are  paid,  and  before  the 
common  stock  receives  anything. 

Watered  Stock. — That  which  purports  to  represent, 
but  does  not  represent  in  good  faith,  money  paid  into 
the  treasury  of  the  company,  or  money's  worth  actually 
contributed  to  the  working  capital  of  the  corporation, 
is  watered  stock.  For  instance,  if  a  certain  stock  is 
paying  annual  dividends  of  10  per  cent,  as  much  more 
stock  may  be  issued,  giving  each  stockholder  twice  as 
many  shares  of  stock  bearing  5  per  cent.  Companies 
having  municipal  franchises  for  lighting,  water  supply, 
street  railways,  transportation  and  other  semi-public 
functions,  always,  as  a  matter  of  policy,  issue  sufficient 
"fictitious"  stock  to  keep  their  dividends  down  to  an 
apparently  low  figure.  In  many  cases,  corporations 
judiciously  "water"  their  stock  to  prevent  rivals,  or  pos- 
sible competitors,  from  knowing  the  real  profits  of  the 
business. 

Generally  there  is  no  legal  prohibition  against  the 
"watering"  of  stocks,  provided  no  one  is  defrauded 
thereby.  In  many  states,  however,  all  such  issues  of 
"fictitiously  paid-up"  stock  are  prohibited.  These  stat- 
utes, however,  are  frequently  evaded. 

Certificates  of  Stock. — The  stock  certificate  is  docu- 
mentary evidence  of  ownership  of  stock  in  the  corpora- 
tion issuing  such  certificate,  by  certifying  that  the  per- 
son named  therein  is  the  owner  of  record  of  a  certain 


BUSINESS    LAW.  29 

number  of  shares  of  the  company's  stock.  The  owner- 
ship of  the  stock  goes  with  the  certificate  and  its  signed 
indorsement,  but  the  ownership  of  record  remains  with 
the  original  holder  till  the  transfer  is  made  upon  the 
books  of  the  company.  In  the  meantime  the  original 
holder  has  power  to  exercise  all  the  rights  of  a  stock- 
holder. For  this  reason  transfers  should  be  made  with- 
out delay. 

Subscriptions  to  Stock. — A  subscription  to  the  stock 
of  a  corporation  is  an  agreement  on  the  part  of  the 
subscriber  to  take  a  specified  number  of  its  shares  and 
if  unqualified,  is  held  to  mean  at  par  and  for  cash. 
Stock  subscriptions  may  be  paid  in  property,  and  in 
most  of  the  states,  in  labor  or  services  when  it  has 
been  so  agreed.  Stock  may  be  issued  in  this  way  for 
mines,  factories,  patent  rights,  the  good  will  and  other 
assets  of  a  business,  and  for  any  other  kind  of  property 
that  might  be  purchased  for  cash.  The  privilege  of 
safely  issuing  stock  for  property  is  often  of  the  greatest 
importance  in  the  exploitation  of  mines,  inventions  and 
other  speculative  enterprises.  It  is  so  often  abused 
that  in  some  states  it  is  most  rigorously  hedged  about, 
and  any  over-valuation  is  made  dangerous  for  both  the 
officials  of  the  company  and  the  holders  of  its  stock. 

STOCKHOLDERS. 

The  subscribers  to  the  capital  stock  of  a  corporation 
are  accounted  stockholders  even  before  the  permanent 
organization  of  the  company  and  the  delivery  of  their 
stock,  and  have  the  right  to  participate  in  stockholders* 
meetings. 

Rights  of  Stockholders. — The  individual  rights  of 
holders  of  common  stock  are,  briefly:  (1)  To  partici- 
pate in  stockholders'  meetings,  in  person  or  by  proxy, 
and  to  cast  one  vote  for  each  share  of  stock  held;  (2) 
to  participate,  according  to  the  amount  of  stock  owned, 
in  dividends;  (3)  in  the  event  of  the  dissolution  of  the 
corporation,  to  participate,  in  due  proportion,  in  any 
assets  that  may  remain  after  paying  the  corporate 
debts.  The  individual  rights  of  holders  of  preferred 
stock  are  governed  by  the  conditions  of  issue  which 
should   be   inscribed   in  full   on  the   face   of   preferred 


30  BUSINESS    MAN'S    ENCYCLOPEDIA. 

stock  certificates.  In  the  absence  of  conditions,  pre- 
ferred stock  carries  all  the  rights  of  common  stock, 
including  participation  in  stockholders'  meetings  and  in 
general  dividends  after  the  common  stock  has  received 
a  dividend  equal  to  the  preferred  dividend. 

A  stockholder,  as  such,  has  absolutely  no  voice  in  the 
management  of  the  company  beyond  his  individual  stock 
vote  on  matters  brought  before  the  stockholders'  meet- 
ings. The  subjects  upon  which  action  can  be  taken  at 
these  meetings  may  be  summed  up  as  follows:  (1) 
Adoption  or  amendment  of  by-laws,  and  the  passage  of 
resolutions;  (2)  election  of  directors;  (3)  amendment 
of  the  charter;  (4)  dissolution  of  the  company;  (5)  sale 
of  the  entire  assets;  (6)  any  vital  or  radical  action; 
(7)  exercise  of  any  statutory  or  specially  conferred  char- 
ter powers. 

BY-LAWS. 

By-laws  are  the  permanent  rules  of  corporate  action 
as  distinguished  from  resolutions,  which  are  but  tem- 
porary in  their  effect  and  apply  only  to  the  particular 
occasions  for  which  they  are  passed. 

Sources  of  Authority. — The  general  management  of 
a  corporation  must,  as  a  matter  of  course,  conform  to: 
(1)  The  constitution  and  laws  of  the  state  of  incorpora- 
tion; (2)  the  provisions  of  its  charter;  (3)  the  provi- 
sions of  the  common  or  general  corporation  law;  (4) 
the  regulations  of  its  by-laws;  (5)  the  rules  of  parlia- 
mentary law  so  far  as  applicable.  In  the  by-laws  it  Is 
desirable  to  collate  and  repeat  the  provisions  from  these 
several  sources  that  bear  most  directly  on  the  manage- 
ment and  procedure  of  the  corporation. 

irregularities. — Any  stockholder  or  creditor  of  a  cor- 
poration has  the  right  to  demand  the  regular  and  lawful 
conduct  of  its  business,  and  hence  any  irregularities  of 
procedure  may  lead  to  legal  interference.  Many  irregu- 
larities in  corporation  organization  and  procedure  are 
passed  over  or  legalized  by  the  acquiescence  or  assent 
of  all  the  parties  concerned,  as  in  the  waiving  of  the 
legal  formalities  of  the  first  meeting  or,  as  is  often  the 
case  in  small  corporations,  the  formal  regulations  are 
quite  commonly  waived  at  convenience. 


BUSINESS   LAW.  31 

Classification. — By-laws  are  usually  grouped  under 
the  following  heads:  (1)  Stock;  (2)  Stockholders;  (3) 
Directors;  (4)  Officers;  (5)  Dividends  and  Finances; 
(6)  Sundry  Provisions;   (7)  Amendments. 

GOVERNMENT   SUPERVISION    OF  CORPORATIONS. 

The  bureau  of  corporations  as  a  part  of  the  depart- 
ment of  commerce  and  labor  has,  as  its  main  purpose, 
authority  "to  gather,  compile,  publish,  and  supply  useful 
information  concerning  corporations  doing  business 
within  the  limits  of  the  United  States  that  shall  engage 
in  interstate  commerce  or  commerce  between  the  United 
States  and  any  foreign  country,  including  corporations 
engaged  in  insurance."  The  bureau  of  corporations  has 
nothing  whatever  to  do  with  common  carriers.  It  can- 
not investigate  the  Standard  Oil  company's  rebate  sys- 
tem on  railroads  nor  the  operations  of  tank  cars  and 
ships.  It  cannot  touch  private  car  lines  nor  any  sub- 
sidiary corporations  on  railroads  by  means  of  which  the 
beef  trust,  steel  trust,  and  almost  every  other  trust  man- 
ages to  do  business  to  the  exclusion  of  smaller  rivals. 
All  that  belongs  to  the  interstate  commerce  commission, 
and  the  bureau  of  corporations  is  by  law  forbidden  to 
investigate  common  carriers. 

Trusts. — The  modern  industrial  trust  is  merely  a 
large  corporation  composed  of  a  number  of  smaller  cor- 
porations, enterprises  previously  separate,  and,  usually, 
under  independent  management. 

Cumulative  Voting. — Certain  states  permit  the  option 
of  "bunching'*  or  distributing  votes,  at  the  will  of  the 
voter.  This  is  permissible  in  New  York,  West  Virginia, 
and  Pennsylvania,  the  constitution  of  the  New  York 
law  reading,  "That  at  all  elections  of  directors  of  such 
corporation  each  stockholder  shall  be  entitled  to  as 
many  votes  as  shall  equal  the  number  of  his  shares  of 
stock,  multiplied  by  the  number  of  directors  to  be 
elected,  and  that  he  may  cast  all  of  such  votes  for  a 
single  director  or  may  distribute  them  among  the  num- 
ber to  be  voted  for,  or  any  two  or  more  of  them,  as  he 
sees  fit,  which  right  when  exercised  shall  be  termed 
cumulative  voting,'* 


32  BUSINESS    MAN'S    ENCYCLOPEDIA, 

CORPORATION   ACCOUNTING. 

Besides  the  books  of  a  corporation  necessary  to  re- 
cord the  issues  and  transfers  of  shares,  there  must  of 
course  be  kept  books  to  record  the  business  transactions 
of  the  company.  These  books,  so  far  as  the  general 
business  is  concerned,  are  kept  the  same  as  for  firms 
not  corporations,  but  differ  from  them  as  to  the  making 
of  the  entries  affecting  capital  stock. 

When  a  corporation  is  formed  it  falls  into  one  of  the 
following  three  general  classes,  so  far  as  the  opening 
of  the  books  is  concerned: 

1.  Shares  issued  for  money  only. 

2.  Shares  issued  for  property  or  for  property  and 
money. 

3.  Shares  issued  for  property  alone,  but  where  work- 
ing capital  is  to  be  provided  by  the  sale  of  stock  do- 
nated to  the  company. 

Entries  for  Class  1. — Capital  stock  $15,000,  sub- 
scribed for  in  equal  amounts  by  Chester  Hall,  Martin 
Hanson,  and  Albert  Mann,  subscriptions  to  be  paid  in 
full  in  one  amount. 

The  journal  entry  is  as  follows: 

Subscription,  15000  00 

Capital  Stock,  15000  00 

For  shares  of  stock  subscribed  as  follows: 
Chester  Hall,         50  shares 
Martin  Hanson,     50  shares 
Albert  Mann,  50  shares 

As  per  subscription  list  dated ,  190. .. 

If  all  the  stock  is  not  subscribed  for,  the  capital 
stock  is  credited  for  only  the  amount  &ubscribed  for. 

The  subscribers  having  paid  in  the  amounts  of  their 
subscriptions,  the  following  entries  should  be  made  on 
the  debit  side  of  the  cash  book: 

Subscriptions,  15000  00 

Amount  paid  in  by  subscribers  for  stock  as  follows: 
Chester  Hall,       $5,000 
Martin  Hanson,     5,000 
Albert  Mann,  5,000 

It  is  not  necessary  to  open  accounts  with  the  in^J- 
vidual  stockholders. 


BUSINESS    LAW.  33 

In  case  the  subscriptions  are  not  paid  in  full,  but  by 
assessments,  as  called  for,  the  journal  entry  debiting 
Subscriptions  and  crediting  Capital  Stock  would  be  as 
before,  and  as  each  assessment,  say  of  10  per  cent.,  is 
called  for,  a  journal  entry  would  be  made  as  follows: 
Assessment  No.  1,  1500  00 

Subscriptions,  1500  00 

Being  assessment  of  10  per  cent,  on  the  shares  of 
the  company  subscribed  as  follows: 

Chester  Hall,  $500 

Martin  Hanson,        500 
Albert  Mann,  500 

As  per  resolution  of  directors  adopted , 

190. ..     (See  Minute  Book,  page  — .) 

When  the  assessment  has  been  paid  to  the  treasurer, 
the  following  entry  is  made  on  the  debit  side  of  the  cash 
book: 

Assessment  No.  1,  1500  00 

Amount  paid  in  by  subscribers  for  stocK  as  follows: 
Chester  Hall,  $500 

Martin  Hanson,         500 
Albert  Mann,  500 

This  will  close  the  account  Assessment  No.  1  in  the 
ledger. 

Entries  for  Class  2. — When  stock  is  issued  at  par  for 
property,  as  the  assets  of  a  going  business,  and  other 
stock  sold  for  cash,  the  various  items  are  debited,  the 
liability  items  credited,  and  Capital  Stock  credited  for 
the  net  value  of  the  investment.  The  stock  subscribed 
for  to  be  paid  for  in  cash  is  treated  as  in  Class  1. 

Entries  for  Class  3. — When  stock  is  issued  for  prop- 
erty, say  a  mine,  and  part  of  such  stock  is  donated  to 
the  company  to  be  sold  at  par  to  provide  working  capi- 
tal, the  entries  are  as  follows: 

Mine,  20000  00 

Capital  Stock,  20000  00 

Full  explanation  of  issue. 
Treasury  Stock,  10000  00 

Working  Capital,  10000  00 

Full  explanation  of  donation. 
When  this  is  sold,  make  a  journal  entry  crediting 
Treasury  Stock  for  the  par  value  of  the  amount  sub- 


34  BUSINESS    MAN'S    ENCYCLOPEDIA. 

scribed  for  and  debiting  Subscription  to  Treasury  Stock 
for  the  amount  of  the  subscriptions  at  the  price  to  be 
paid,  and  debit  Working  Capital  for  the  difference  be- 
tween the  price  paid  and  the  par  value  of  the  stock. 

As  the  subscriptions  are  paid,  debit  Cash  and  credit 
Subscriptions  to  Treasury  Stock. 

If  other  stock  of  the  company  is  sold  at  par,  treat 
it  as  in  Class  1. 

If  stock  is  sold  at  a  premium,  debit  Subscriptions 
for  the  amount  subscribed  for  at  the  price  sold  at,  and 
credit  Capital  Stock  for  the  shares  at  par  and  Working 
Capital  for  the  amount  of  premium. 

Every  entry  should  be  followed  by  a  full  explanation 
of  the  transaction. 

INSURANCE 

Insurance  is  a  contract  whereby  for  a  stipulated  con- 
sideration one  party  undertakes  to  compensate  the  other 
for  loss  on  a  particular  subject  for  a  specified  peril. 
The  party  agreeing  to  make  the  compensation  is  called 
the  insurer,  or  the  underwriter,  the  other  party  to  the 
contract  being  the  insured.  The  written  contract  is 
called  the  policy,  and  the  event  insured  against,  the 
risk. 

FIRE   INSURANCE. 

Fire  insurance  is  a  contract  by  the  insurer  to  in- 
demnify the  owner  or  person  having  an  interest  in  the 
property  insured  for  loss  or  damage  by  fire  during  a 
specified  period.  A  policy  of  fire  insurance  may  be 
open  or  valued.  By  the  former,  the  amount  of  liability 
is  left  to  be  determined  according  to  the  actual  loss; 
by  the  latter,  a  certain  valuation  is  fixed  above  which 
the  insurer  is  not  liable  for  loss.  In  the  absence  of 
statute  or  charter  provision,  the  policy  may  be  in  any 
form;  but  to  avoid  looseness  and  ambiguity  statutes 
in  some  jurisdictions  have  prescribed  the  use  of  a 
standard  policy. 

Insurable  Interest. — An  interest  of  such  a  nature  that 
the  fire  insured  against  would  directly  injure  him,  is 
termed  insurable  interest.  If  the  person  had  no  in- 
terest in  the  property  upon  which  he  obtained  insur- 


BUSINESS    LAW.  35 

ance,  the  only  object  would  be  a  mere  speculation,  and 
the  contract  would  not  be  upheld  in  law. 

Cancellation. — The  standard  form  of  policy  contains 
a  stipulation  that  the  policy  may  be  canceled  at  any 
time  by  the  company,  or  at  the  request  of  the  insured 
upon  giving  five  days'  notice  of  such  cancellation.  In 
case  of  such  cancellation  the  unearned  premiums  paid 
shall  be  returned  to  the  insured. 

Form  of  Contract. — The  contract  of  insurance  is  usu- 
ally in  writing,  although  it  may  be  oral,  unless  expressly 
required  by  the  statute  to  be  written. 

Oral  Contract. — The  contract  is  binding  and  in  force 
as  soon  as  the  agreement  is  completed,  although  the 
written  policy  may  not  have  been  actually  delivered, 
nor  in  fact  ever  have  been  issued. 

Notice  of  Loss. — After  a  loss  it  is  the  duty  of  the 
insured  to  give  immediate  notice  to  the  company.  Un- 
der the  standard  form  of  policy  this  notice  must  be  in 
writing.  The  damaged  goods  must  be  inventoried,  and 
a  proof  of  loss  duly  sworn  to  must  be  filed  within 
sixty  days.  Unless  the  notice  is  given  as  stated  and 
the  proof  of  loss  filed  within  the  specified  time,  no 
recovery  can  be  had  on  the  policy. 

Effect  of  Fraud. — A  contract  of  insurance  is  one  re- 
quiring good  faith  between  the  parties,  and  the  party 
seeking  insurance  is  bound  to  disclose  any  circum- 
stance that  will  affect  the  risk.  Any  fraudulent  dealing 
is  fatal  to  the  rights  of  the  party  responsible  for  it. 
Any  concealment  of  a  material  fact  inquired  into  by  the 
insurer  will,  if  made  intentionally  by  the  insured,  avoid 
the  policy. 

LIFE    INSURANCE. 

A  life  insurance  contract  is,  in  its  simplest  form,  an 
agreement  upon  the  part  of  the  insurer  to  pay  a  specific 
sum  of  money  upon  the  death  of  a  certain  person,  called 
the  insured,  to  a  specific  person  called  the  beneficiary. 
The  consideration  paid  by  the  insured  is  called  the  pre- 
mium, and  is  generally  a  certain  amount  payable  an- 
nually or  monthly.  The  agreement  may  take  the  form 
of  what  is  termed  an  endowment  insurance,  whereby 
the  insured,  after  paying  the  premium  for  a  given  num- 


36  BUSINESS    MAN'S    ENCYCLOPEDIA. 

ber  of  years,  will  receive  a  certain  sum  of  money,  or 
if  he  dies  before  the  expiration  of  the  period,  the 
amount  of  the  policy  will  go  to  the  beneficiary.  The 
beneficiary,  instead  of  being  a  specific  person,  may  be 
the  estate  of  the  insured. 

Premiums. — The  premiums  on  life  insurance  are 
graded  according  to  the  age  of  the  risk.  The  person 
insured  must  undergo  a  physical  examination,  as  only 
healthy  persons  are  insured.  The  amounts  of  the  pre- 
miums are  determined  by  average  results  computed 
upon  the  length  of  life  of  a  large  number  of  persons 
carefully  arranged  and  tabulated.  These  results  so  ar- 
ranged are  called  "mortuary  tables." 

Effect  of  Concealment. — The  contract  of  life  insur- 
ance, like  that  of  fire  insurance,  requires  the  exercise 
of  good  faith  between  the  parties,  but  to  avoid  the  pol- 
icy the  concealment  of  a  material  fact  not  made  the 
subject  of  an  express  inquiry  must  be  intentional.  A 
material  misrepresentation  avoids  a  policy. 

Form  of  Policies. — There  is  no  standard  form  of  life 
insurance  policy,  and  the  forms  of  the  different  compa- 
nies vary  materially.  It  is  customary  to  have  the  policy 
provide  that  the  application  be  made  a  part  of  the  con- 
tract, thereby  making  the  statements  in  the  application 
express  warranties.  So  a  denial  that  one  is  affected 
with  a  disease  avoids  the  policy  if  untrue.  The  applica- 
tion often  inquires  as  to  what  other  insurance  is  car- 
ried, and  a  deceptive  statement  on  this  point  is  fatal 
to  the  policy.  So  also  a  statement  as  to  age  is  material 
a,nd  the  answer  must  be  correct. 

Payment. — The  conditions  of  the  policy  as  to  pay- 
ment of  premiums  must  be  strictly  complied  with  or  the 
policy  fails,  sickness  or  other  inability  to  pay  being  no 
valid  excuse. 

Suicide. — If  the  policy  contains  no  express  stipulation 
to  the  contrary,  the  insurance  company  is  liable  on  a 
policy  if  the  party  insured  commits  suicide,  in  case  a 
third  party  is  the  beneficiary.  If  the  insured  is  the 
beneficiary,  the  rule  will  be  otherwise.  The  policy  fre- 
quently contains  a  clause  exempting  the  company  from 
liability  if  the  insured  commits  suicide. 


BUSINESS    LAW.  37 

Notice  of  Death. — In  life  insurance  the  company  gen- 
erally requires  immediate  notice  of  death  and  due  proof 
that  the  person  insured  is  dead. 

MARINE    INSURANCE. 

Marine  insurance  is  a  contract  by  which  the  insurer 
agrees  to  indemnify  the  insured  against  certain  perils 
or  risks  to  which  his  ships,  cargo,  and  profits  may  be 
exposed  during  a  certain  trip  or  during  a  specified  time. 

Effect  of  Fraud. — The  requirement  of  good  faith  be- 
tween the  parties  is  even  greater  in  marine  insurance 
than  in  any  other  branch  of  insurance.  The  reason  for 
this  is  that  the  insured  has  every  opportunity  to  know 
all  of  the  facts  and  the  insurer  but  limited  opportunity 
to  determine  them.  A  concealment  or  misrepresenta- 
tion of  a  material  fact  either  innocently  or  fraudulently 
avoids  the  contract. 

Warranty. — A  warranty,  as  in  fire  insurance,  must 
be  strictly  performed.  In  marine  insurance  there  are 
three  implied  warranties  which  are  understood  in  every 
contract.  They  are  in  respect  to  seaworthiness,  devia- 
tion, and  legality.  Seaworthiness  is  the  condition  of  a 
ship  when  reasonably  fit  to  perform  the  services  and 
encounter  the  ordinary  perils  incident  to  the  voyage. 
The  second  implied  warranty  is  that  there  shall  be  no 
voluntary  deviation  or  departure  from  the  course  fixed 
by  mercantile  usage,  for  the  voyage  contemplated  by 
the  policy;  and  also  that  there  shall  be  no  unreason- 
able delay  in  commencing  or  making  the  voyage.  The 
third  implied  warranty  is  that  the  voyage  shall  be  legal, 
both  in  its  nature  and  in  the  manner  in  which  it  is  prose- 
cuted. Smuggling  voyages  and  trading  trips  to  an 
enemy's  port  are  cases  of  illegal  voyage. 
•  Losses. — The  loss  may  be  total,  in  which  case  the 
whole  insurance  is  ordinarily  recoverable;  or  it  may 
be  partial,  and  then  only  a  pro  rata  part  can  be  recov- 
ered. 

CASUALTY  INSURANCE. 

Casualty  insurance  is  an  indemnity  against  loss  re- 
sulting from  bodily  injury  or  the  destruction  of  certain 
kinds  of  property.    It  may  be  accident  insurance,  which 


38  BUSINESS    MAN'S    ENCYCLOPEDIA. 

is  an  indemnity  against  personal  injury  by  accident,  or 
it  may  be  one  of  the  numerous  classes  of  insurance 
that  have  sprung  up  within  the  past  few  years,  granting 
indemnity  against  almost  every  conceivable  form  of 
catastrophe.  Among  these  special  forms  of  casualty 
insurance  may  be  mentioned  plate  glass,  boiler,  tornado, 
employer's  liability,  fidelity,  credit,  and  title  insurance. 

Accident  Insurance. — Accident  insurance  is  a  branch 
of  life  insurance,  the  latter  insuring  against  death  by 
any  cause,  while  the  former  insures  against  death  or 
injury  caused  by  accident.  This  class  of  insurance 
usually  provides  a  certain  payment  in  case  of  accidental 
death,  a  weekly  indemnity  for  either  permanent  or  total 
disability  by  reason  of  accident,  and  a  fixed  sum  for 
such  permanent  injury  as  the  loss  of  one  or  both  of 
the  hands,  feet,  or  eyes.  An  accident  in  this  sense  is 
an  unforeseen  event  which  results  in  injury  to  one's 
person. 

Fidelity  Insurance. — Fidelity  or  guaranty  insurance 
is  a  contract  by  which  an  employer  is  insured  against 
loss  by  the  fraud  or  dishonesty  of  his  employees,  being 
a  guarantee  of  the  honesty  of  an  employee.  Fidelity  in- 
surance companies  also  issue  bonds  guaranteeing  the 
faithful  performance  of  contracts,  as  those  executed  by 
persons  holding  places  of  trust. 

Credit  Insurance. — Credit  insurance  protects  mer- 
chants and  tradesmen  from  loss  through  the  insolvency 
or  dishonesty  of  their  customers.  For  a  certain  pre- 
mium the  insurance  company  guarantees  the  merchant 
against  bad  debts.  The  merchants  must  usually  bear 
a  certain  small  per  cent,  and  all  losses  over  that  amount 
are  paid  by  the  insurance  company. 

Title  Insurance. — Title  insurance  is  a  guaranty  to 
the  owner  of  real  property  that  his  title  is  clear.  It  is 
an  insurance  against  defects  in  the  title  to  the  property 
insured,  and  in  case  of  loss  by  reason  of  liens  or  incum- 
brances prior  to  the  interest  of  the  insured,  the  com- 
pany indemnifies  him. 

Plate  Glass  Insurance. — Plate  glass  insurance  Is  an- 
other branch  of  casualty  insurance  frequently  employed, 
the  premium  being  based  upon  the  cost  price  of  the 
windows. 


BUSINESS    LAW.  39 

Elevator  Insurance. — Elevator  insurance  consists  of 
a  contract  which  covers  the  risk  incidental  to  the  use 
of  elevators,  including  both  the  damage  to  the  elevators 
themselves  and  to  persons  or  property  that  may  be  in- 
jured by  the  use  of,  or  by  accident  occurring  to,  such 
elevators. 

Steam  Boiler  Insurance. — This  insurance  covers  in- 
jury to  property  or  persons  by  reason  of  the  explosioD. 
of  steam  boilers. 

LANDLORD  AND  TENANT 

Leases. — By  the  statute  of  frauds  in  most  states  the 
lease  must  be  in  writing,  if  for  a  longer  time  than  one 
year.  Generally,  if  for  one  year  or  less  it  may  be  made 
orally,  and  this  is  true  even  though  the  term  is  to  com- 
mence at  a  date  in  the  future.  In  a  few  states  leases 
can  be  made  for  only  a  limited  number  of  years,  while 
in  others  a  lease  for  more  than  a  certain  number  of 
years  must  be  recorded. 

Covenants. — Aside  from  the  above  provision;^  any 
further  agreement  between  the  parties  may  be  incor- 
porated in  the  writing.  A  lease  is  but  a  contract,  and 
the  full  agreement  of  the  parties  should  be  set  forth. 
Frequently  the  following  covenant  is  inserted:  "The 
party  of  the  second  part  hereby  covenants  not  to  sublet 
said  premises,  or  any  portion  thereof,  without  the  writ- 
ten consent  of  said  party  of  the  first  part." 

Term. — The  term  of  the  lease  is  the  time  for  which 
it  is  to  run.  If  the  tenant  has  been  in  possession  under 
a  lease  for  one  or  more  years,  and  he  retains  possession 
without  executing  a  new  lease,  he  is  presumed,  in  the 
absence  of  some  agreement,  to  be  a  tenant  from  year 
to  year,  which  means  that  his  term  after  the  expiration 
of  the  lease  is  one  year,  and  if  he  remains  in  possession 
after  the  next  year  he  is  a  tenant  for  another  year. 

Express  and  Implied  Covenants. — The  covenants  con- 
tained in  a  lease  are  either  expressed  or  implied.  The 
Implied  covenants  exist  whether  they  are  mentioned  or 
not;  the  express  covenants  must  be  included  in  the  ex- 
press conditions  of  the  lease,  and  may  be  many  or  few. 
The  implied  covenants,  on  the  part  of  the  lessor,  are 


40  BUSINESS    MAN'S    ENCYCLOPEDIA, 

those  regarding  quiet  enjoyment  and  the  payment  of 
taxes.  The  usual  words  of  grant  in  a  lease  are  "demise 
and  lease,"  or  "grant  and  demise,"  these  words  being 
said  to  import  a  covenant  of  quiet  enjoyment.  This  cov- 
enant is  broken  when  the  tenant  is  evicted  by  some  one 
who  has  a  paramount  title.  The  landlord  also  impliedly 
covenants  that  he  will  pay  all  taxes  assessed  against  the 
premises  during  the  term.  There  is  no  implied  cov- 
enant on  the  part  of  the  lessor,  or  landlord,  that  the 
premises  are  in  a  tenantable  condition.  On  the  part  of 
the  lessee,  or  tenant,  there  is  an  implied  covenant  that 
he  shall  pay  the  rent  stipulated  for;  and,  although  no 
sum  is  specified  in  the  lease,  the  tenant  must  pay  a  rea- 
sonable rent,  unless  it  appears  that  it  was  the  intention 
of  the  parties  that  none  was  to  be  paid.  The  lessee 
also  impliedly  to  keep  the  premises  in  ordinary  repair. 

Rights  and  Liabilities  Under  a  Lease. — Aside  from 
the  covenants  in  a  lease  there  are  certain  rights  and 
liabilities  which  arise  from  the  relation  of  landlord  and 
tenant.  In  the  absence  of  an  agreement  to  the  con- 
trary the  tenant  is  entitled  to  the  exclusive  possession 
of  the  premises.  He  is  liable  for  waste  and  is  estopped 
from  denying  his  landlord's  title;  that  is,  the  tenant  can- 
not for  any  purpose  claim  that  the  premises  do  not 
belong  to  his  landlord.  The  landlord  is  under  no  obliga- 
tion to  repair  unless  the  lease  expressly  binds  him  to 
such  duty.  And  he  is  entitled  to  the  fixtures  annexed 
to  and  made  a  part  of  the  realty. 

Assigning  or  Subletting  of  Lease. — Unless  the  tenant 
is  restrained  by  an  express  covenant  against  subletting 
or  assigning,  he  may  assign  or  sublet  his  lease  without 
the  consent  of  the  landlord.  If  the  interest  granted  by 
the  lessee  is  for  a  shorter  time  or  for  rights  inferior  to 
those  granted  in  his  own  lease,  it  is  a  sublease. 

Eviction. — At  the  expiration  of  the  lease  the  landlord 
is  entitled  to  the  possession  of  the  premises,  and  if  the 
tenant  does  not  surrender  them,  the  landlord  may  in- 
stitute proceedings  to  evict  him.  The  statutes  in  the 
different  states  provide  the  procedure  by  which  the  ten- 
ant holding  over  after  his  lease  has  expired  may  be 
evicted  on  short  notice.  This  is  termed  "summary  pro- 
ceedings."   This  form  of  procedure  is  also  provided  by 


BUSINESS    LAW.  41 

statute  for  the  eviction  of  the  tenant  when  he  does  not 
pay  his  rent.  Where  the  tenancy  is  not  for  any  fixed 
period,  but  is  a  tenancy  from  year  to  year  or  month  to 
month,  it  cannot  be  terminated  by  either  party  except 
by  notice.  Under  the  common  law  a  tenancy  from  year 
to  year  could  be  terminated  by  notice  six  months  be- 
fore the  expiration  of  the  period,  and  in  the  case  of  a. 
tenancy  for  a  shorter  period,  as  from  month  to  month,, 
by  a  notice  equal  to  the  length  of  the  period.  Until 
this  notice  has  been  given,  the  landlord  cannot  evict, 
the  tenant,  and  until  the  tenant  has  given  a  like  notice 
to  the  landlord,  he  is  liable  to  be  held  for  the  rent  un- 
less the  landlord  accepts  his  surrender  of  the  premises. 
The  statutes  in  the  different  states  have  in  many  in- 
stances changed  the  common  law  rule  and  a  shorter 
notice  is  rendered  sufficient. 

CARRIERS 

A  carrier  is  a  person  or  company  that  undertakes  ta 
carry,  or  makes  a  business  of  carrying,  persons  or  goods 
for  hire.  They  may  be  either  private,  or  public  or  com- 
mon, carriers.  A  private  carrier  is  one  who  carries  only 
occasionally  and  not  as  a  public  business  or  employ- 
ment. Such  a  carrier  is  not  bound  to  serve  all  wha 
offer  to  employ  him.  He  is  liable  for  negligence  in 
transporting  the  goods,  but  is  held  only  to  the  exercise 
of  ordinary  diligence.  Public  or  common  carriers  are 
those  whose  regular  business  it  is  to  carry  goods  from 
place  to  place  for  all  persons  who  choose  to  employ 
and  remunerate  them,  such  as  railroad,  express,  and 
steamship  companies.  They  may  be  carriers  of  passen- 
gers or  carriers  of  goods,  but  it  is  to  the  last-named 
class  that  the  term  is  usually  applied.  To  constitute 
one  a  common  carrier,  he  must  have  held  himself  out  to^ 
the  public  as  ready  to  carry,  for  hire,  as  a  business,, 
goods  of  the  sort  he  professes  to  carry. 

DUTIES  OF  COMMON  CARRIERS. 

Goods  and  Payment  for  Carriage. — Common  carriers 
are  said  to  be  carriers  of  "goods,"  and  this  term  in- 
cludes animals,  money,  and  in  fact  any  article  of  per- 


42  BUSINESS    MAN'S    ENCYCLOPEDIA. 

sonal  property  that  is  subject  to  transportation.  By 
the  common  law  a  common  carrier  is  bound  to  receive 
without  respect  to  persons  whatever  may  be  offered 
him  for  transportation,  when  the  charges  are  paid  or 
offered  to  be  paid.  After  the  goods  have  been  delivered 
to  the  carrier  the  shipper  cannot  retake  them  without 
paying  the  freight,  and  if  they  are  intercepted  before 
reaching  their  destination,  the  full  freight  can  be  recov- 
ered by  the  carrier.  The  consignor  or  shipper  is  the 
party  primarily  liable  for  the  freight  and  not  the  con- 
signee or  the  person  to  whom  the  goods  are  shipped, 
unless  the  consignee  expressly  agrees  to  pay  it. 

Regulation  of  Charges. — The  charges  that  may  be 
made  are  in  some  instances  regulated  by  statute,  and 
when  not  so  regulated  they  must  be  reasonable  and  the 
same  as  generally  charged  to  others  for  the  same 
services. 

Right  to  Refuse  Goods. — The  rule  that  a  common 
carrier  is  found  by  the  common  law  to  receive  whatever 
is  offered  to  him  to  carry  without  respect  to  the  persons 
offering  is  subject  to  three  qualifications — viz.:  First,  the 
offer  of  the  chattel  must  be  for  hire;  second,  the  bail- 
ment must  be  within  the  carrier's  means  of  safe  con, 
veyance;  third,  such  carriage  should  be  in  the  line  of 
his  vocation. 

Interstate  Commerce  Law. — The  carrier  may  pre- 
scribe reasonable  rules  as  to  the  time  and  manner  of 
receiving  goods.  He  cannot  be  required  to  receive  them 
at  an  unreasonable  hour  or  place,  and  he  may  insist 
that  the  goods  be  packed  in  a  reasonable  way.  But  by 
statutes  passed  in  most  of  the  states  the  carrier  is  pro* 
hibited  from  discriminating  in  favor  of  one  customer 
over  another  either  in  rates  or  privileges  of  any  kind. 
The  common  carrier  must  not  select  his  patrons  arbi- 
trarily, but  must  furnish  equal  facilities  to  all.  To 
further  this  object  a  statute  was  passed  by  the  Congress 
of  the  United  States  in  1887  which  is  known  as  the  in- 
terstate commerce  law.  This  law  was  designed  to  reg- 
ulate the  commerce  between  the  states  and  applies  to 
all  common  carriers,  either  by  land  or  water,  who  do 
business  in  two  or  more  states  or  territories.  It  pro- 
vides  that  no   discrimination   shall   be   made  between 


BUSINESS    LAW,  43 

large  or  small,  constant  or  occasional,  shippers,  and 
that  no  charges  shall  be  unjust  or  unreasonable.  It 
also  provides  that  proportionate  charges  shall  be  made 
for  long  and  short  distances.  The  law  further  requires 
that  the  schedule  of  rates  shall  be  published  and  filed 
with  commissioners  who  are  appointed  to  oversee  the 
enforcement  of  the  law  and  are  known  as  the  interstate 
commerce  commissioners.  The  act  also  makes  it  un- 
lawful for  any  common  carrier  who  comes  under  its  pro- 
visions to  enter  into  any  combination  or  agreement  by 
which  the  continuous  carriage  of  freight  from  one  point 
to  another  shall  be  delayed  or  interrupted.  All  of  the 
large  railroad  and  express  companies  do  business  in 
more  than  one  state,  and  therefore  come  within  the  pro- 
visions of  this  act. 

When  Liability  Begins. — The  common  carrier  be- 
comes responsible  for  the  goods  when  they  are  delivered 
to  him  for  carriage  and  accepted  by  him  in  the  capac- 
ity of  a  carrier,  except  when  the  loss  arises  from  any 
of  the  following  causes:  (1)  By  an  act  of  God,  or  by  a 
public  enemy;  (2)  by  the  act  of  the  shipper;  (3)  by  the 
act  of  the  public  authority;  (4)  from  the  nature  of  the 
goods. 

Limitation  of  Liability  by  Contract. — The  carrier  in 
most  of  the  states  may  limit  his  liability  to  a  certain 
extent  by  contract  with  the  shipper  as  to  release  for 
loss  by  fire,  robbery,  accidental  delay,  etc.,  but  he  can 
not  contract  away  his  liability  for  the  fraud,  misconduct, 
or  negligence  of  himself,  his  agents,  or  servants. 

Delivery  by  Carrier. — At  the  termination  of  the  Jour- 
ney the  goods  transported  shall  be  delivered  to  the  con- 
signee or  his  authorized  agent  within  a  reasonable  time, 
the  carrier  being  liable  for  delivery  to  the  right  party. 
Goods  must  be  delivered  to  the  holder  of  the  bill  of 
lading  whether  the  holder  be  the  consignee  or  a  pur- 
chaser. A  delivery  at  a  residence  or  place  of  business 
is  sufficient,  other  delivery  being  at  the  carrier's  risk. 

CARRIERS  OF  PASSENGERS. 

Liability. — A  common  carrier  of  passengers  Is  bound 
to  receive  and  carry  alike  all  persons  applying  and 
willing  to  pay  for  their  transportation.     The  fare  re- 


44  BUSINESS    MAN'S    ENCYCLOPEDIA. 

quired  of  the  passenger  must  be  reasonable,  and  in 
many  states  it  is  regulated  by  statute.  The  carrier  is 
bound  to  have  means  and  appliances  suitable  to  the 
transportation,  and  to  use  all  reasonable  precautions 
for  the  safety  of  passengers.  He  can  prescribe  rea- 
sonable rules  as  to  showing  tickets,  etc.  The  carrier 
is  not  an  insurer  of  the  lives  and  safety  of  the  passen- 
gers, but  he  is  held  to  a  high  degree  of  care,  and 
will  be  liable  for  even  slight  negligence.  While  the  car- 
rier does  not  warrant  the  safety  of  the  passengers,  he  is 
held  to  the  highest  degree  of  care  practicable  under 
the  circumstances.  In  most  of  the  states  the  carrier 
is  not  permitted  to  limit  his  liability  for  injury  to  the 
passenger.  It  is  considered  contrary  to  public  policy 
to  exempt  the  carrier  from  liability  for  even  slight  neg- 
ligence when  the  lives  and  safety  of  human  beings  are 
concerned.  The  passenger  who  pays  his  fare  to  the 
carrier  is  entitled  to  have  certain  baggage  taken  with- 
out charge,  and  for  this  baggage  the  carrier  is  liable 
as  for  the  carriage  of  freight.  Baggage  in  this  sense 
includes  such  articles  of  personal  necessity,  conveni- 
ence, and  comfort  as  travelers  under  the  circumstances 
are  wont  to  take  on  their  journeys.  It  does  not  include 
merchandise  or  a  stock  of  goods  used  in  the  traveler's 
business. 

EXEMPTION  LAWS 

In  most  of  the  states  there  exists  a  homestead  law 
which  exempts  certain  real  property  from  liability  of 
attachment  by  the  creditors  of  the  owner.  Certain  per- 
sonal property  is  also  exempt,  and  in  most  cases  wages 
are  exempt  for  a  specified  period.  The  following  is 
approximately  the  law  in  the  several  states  and  terri- 
tories:— 

Alabama. — Homestead  to  the  value  of  $2000  or  160 
acres  of  land  not  exceeding  $2000  in  value.  Personal 
property  to  the  value  of  $1000  and  $25  wages. 

Alaslca. — No  homestead  law.  Specified  articles  of 
personal  property  worth  from  $750  to  $1000,  and  wages 
for  thirty  days  preceding  judgment. 


BUSINESS    LAW,  45 

Arizona. — Homestead  to  the  value  of  $4000  if  claim 
is  recorded.  Personal  property  to  the  value  of  $1000. 
Wages  earned  for  thirty  days  preceding  levy. 

Arkansas. — Homestead  of  160  acres  in  country  or 
one-quarter  acre  in  town  or  village,  not  exceeding  in 
value  $2500.  Personal  property  including  wages  for 
sixty  days  to  the  amount  of  $500  for  the  head  of  a 
family  and  $200  for  a  single  person. 

California. — Homestead  to  the  value  of  $5000.  Cer- 
tain specified  articles  of  personal  property  not  to  ex- 
ceed $1000.  Wages  for  thirty  days  if  necessary  to  sup- 
port family,  but  one  half  of  wages  is  liable  for  debts 
contracted  for  necessaries. 

Colorado. — Homestead  to  the  value  of  $2000  if  claim 
is  recorded.  Certain  specified  articles  of  personal  prop- 
erty, including  library  and  instruments  of  professional 
men.    Sixty  per  cent  of  any  amount  of  wages  due. 

Connecticut. — Homestead  to  amount  of  $1,000  if  claim 
is  recorded.  Certain  specified  articles  of  personal  prop- 
erty and  wages  to  the  amount  of  $50. 

Delaware. — No  homestead  exemption,  and  each  coun- 
ty has  a  special  law  as  to  exemption  of  personal  proih 
erty. 

District  of  Golumhia. — Specified  articles  of  personal 
property  not  exceeding  $1000.  Wages  for  two  months 
not  to  exceed  $200  and  the  salary  of  all  government 
employees. 

Florida. — Homestead  consisting  of  160  acres  in  coun- 
try or  one  half  acre  in  town.  Personal  property  to  the 
value  of  $1000  for  the  head  of  a  family  residing  in  the 
state,  and  all  wages. 

Georgia. — Constitution  of  the  state  provides  a  home- 
stead exemption  of  $1600,  either  real  or  personal  prop- 
erty, and  the  statutes  allow  fifty  acres  of  land  and  five 
acres  additional  for  every  child  under  sixteen  years  of 
age.  Certain  specified  articles  of  personal  property 
and  all  laborers*  wages. 

Idaho. — Homestead  to  the  value  of  $5000  for  a  mar- 
ried man  and  $1000  for  a  single  man,  but  declaration  of 
homestead  must  be  filed.  Specified  articles  of  personal 
property  to  the  value  of  $1000  and  wages  for  thirty 
days. 


46  BU8INE8S    MAN'S    ENCYCLOPEDIA. 

Illinois. — Homestead  to  value  of  $1000.  Personal 
property,  $400  for  married  persons,  $100  for  single  per- 
sons. Wages  to  the  amount  of  $15  weekly  for  the  head 
of  a  family. 

Indiana. — $600  worth  of  either  real  or  personal  prop- 
erty is  allowed  as  exemption  to  householders  and  mar- 
ried women  residents  of  the  state.  One  month's  wages 
not  to  exceed  $25. 

Indian  Territory. — Homestead  worth  $2500,  but  not 
to  exceed  160  acres  if  in  the  country.  Personal  prop- 
erty and  wages  for  sixty  days,  not  to  exceed  $500  for 
married  persons  and  $200  for  single  persons. 

Iowa. — Homestead  one  half  acre  in  town  or  forty 
acres  in  country.  Specified  articles  of  personal  property 
not  to  exceed  $200  and  wages  for  ninety  days. 

Kansas. — Homestead  one  acre  in  town  and  160  acres 
in  country.  Specified  articles  of  personal  property  and 
wages  for  three  months  preceding  levy. 

Kentucky. — Homestead  to  the  value  of  $1000.  Speci- 
fied articles  of  personal  property  and  wages  to  the 
amount  of  $50. 

Louisiana. — Homestead  to  the  value  of  $2000.  Speci- 
fied articles  of  personal  property  and  all  laborers* 
wages. 

Maine. — Homestead  to  the  value  of  $500  if  recorded. 
Specified  articles  of  personal  property.  Wages  to  the 
value  of  $20  except  in  suit  for  necessaries  and  then  $10. 

Maryland. — $100  worth  of  personal  property  and 
wages  to  the  amount  of  $100. 

Massachusetts. — Homestead  to  the  value  of  $800  if 
recorded.  Specified  articles  of  personal  property  and 
wages  to  the  amount  of  $20  except  in  suit  for  neces- 
saries, and  then  $10. 

Michigan. — Homestead  to  the  value  of  $1500.  Speci- 
fied articles  of  personal  property  and  goods  to  the  value 
of  $250.  Eighty  per  cent  of  the  wages  of  a  household- 
er not  to  exceed  $30,  others  forty  per  cent  up  to  $15. 

Minnesota. — Homestead  consisting  of  a  city  lot  or 
one  half  acre  in  a  town  or  eighty  acres  in  the  country, 
not  allowed  to  a  single  man  unless  he  resides  on  the 


BUSINESS    LAW.  47 

property.  Specified  articles  of  personal  property 
amounting  to  about  $1500  and  wages  to  the  amount 
of  $25. 

Mississippi. — Homestead  to  the  value  of  $2000,  but 
not  over  160  acres  if  in  the  country.  Personal  property 
consisting  of  certain  articles  in  the  country,  and  to  the 
value  of  $250  in  towns.  Wages  of  $100  per  month  to 
head  of  family,  $20  to  others. 

Missouri. — Homestead  to  the  value  of  $3000  in  cities 
and  $1500  in  country  and  towns.  Personal  property 
consisting  of  certain  specified  articles  not  to  exceed  in 
value  $300,  including  ninety  per  cent  of  wages. 

Montana. — Homestead  to  the  value  of  $2500.  Speci- 
fied articles  of  personal  property  and  wages  for  thirty 
days. 

Nebraska. — Homestead  to  the  value  of  $2000.  Per- 
sonal property  not  exceeding  $500,  but  not  in  addition 
to  homestead,  and  wages  for  sixty  days. 

Nevada. — Homestead  to  the  value  of  $5000.  Speci- 
fied articles  of  personal  property  and  wages  not  to  ex- 
ceed $50  earned  in  month  process  is  issued. 

New  Hampshire. — Homestead  to  the  value  of  $500. 
Certain  specified  articles  of  personal  property  and 
wages  to  the  amount  of  $20  except  as  against  debts  for 
necessaries. 

New  Jersey. — Homestead  to  the  value  of  $1000  if  ad- 
vertised and  recorded  according  to  law.  Personal  prop- 
erty to  the  amount  of  $200  and  wearing  apparel,  also 
all  wages. 

New  Mexico. — Homestead  to  the  value  of  $1000.  Per- 
sonal property  consisting  of  certain  specific  articles  and 
$500  when  party  does  not  own  homestead.  Wages  for 
three  months,  except  in  certain  specific  cases. 

New  York. — Homestead  to  the  value  of  $1000  if 
notice  is  recorded.  Certain  specific  articles  to  the  head 
of  a  family,  and  personal  property  in  addition  to  the 
value  of  $250,  except  for  purchase  price.  Wages  for 
sixty  days  if  necessary  for  the  support  of  the  family. 

North  Carolina. — Homestead  to  the  value  of  $1000. 
Personal  property  to  the  value  of  $500,  and  sixty  days* 
wages  if  necessary  for  the  support  of  the  family. 


48  BUSINESS    MAN'S    ENCYCLOPEDIA. 

North  Dakota. — Homestead  to  the  value  of  $5000. 
Personal  property  to  the  value  of  $1000  to  the  head  of 
the  family  residing  in  the  state.    Wages  not  exempt. 

Ohio. — Homestead  to  the  value  of  $1000.  Certain 
specific  articles  of  personal  property.  Wages  for  three 
months  if  necessary  for  the  support  of  the  family. 

OJclahoma. — Homestead  consisting  of  160  acres  in 
the  country,  or  one  acre  in  city  or  town.  Personal 
property  consisting  of  certain  specific  articles.  Wages 
for  ninety  days  to  the  head  of  a  family. 

Oregon. — Homestead  to  the  value  of  $1500,  not  to  be 
less  than  twenty  acres  in  the  country  or  one  lot  in  city 
or  town.  Personal  property  consisting  of  certain  spe- 
cific articles,  and  wages  for  thirty  days  if  necessary  for 
tne  support  of  the  family. 

Pennsylvania. — Real  or  personal  property  to  the 
/alue  of  $300,  and  all  wages. 

Rhode  Island. — Household  furniture  to  the  value  of 
$300,  tools  and  books  to  the  value  of  $300,  and  library 
of  professional  men.  Wages  to  the  amount  of  $10,  ex- 
cept as  against  debts  for  necessaries. 

South  Carolina. — Homestead  to  the  value  of  $1000. 
Personal  property  to  the  value  of  $500.  Wages  for  sixty 
days  if  there  is  a  family  depending  on  them  for 
support. 

South  Dakota. — Homestead  consisting  of  160  acres 
in  the  country  or  one  acre  in  city  or  town,  to  the  value 
of  $5000.  Personal  property  to  the  value  of  $750,  to  the 
head  of  a  family,  and  $300  to  a  single  person  not  the 
head  of  a  family.  No  exemptions  against  purchase 
price.  Wages  for  sixty  days  if  necessary  for  support 
of  family. 

Tennessee. — Homestead  to  the  value  of  $1000.  Cer- 
tain specific  articles  of  personal  property.  $30  in 
wages. 

Texas. — Homestead  consisting  of  200  acres  in  coun- 
try, or  city  lot  to  the  value  of  $5000.  Certain  specific 
articles  of  personal  property.  Current  wages  for  per- 
sonal services. 

Utah.— Uomestesid.  to  the  value  of  $1500,  and  $500 
additional  for  wife  and  $250  for  each  child.     Certain 


BUSINESS    LAW.  49 

specific  articles  of  personal  property  not  exceeding 
$1000,  and  one  half  of  wages  for  thirty  days,  but  not  to 
be  less  than  $30. 

Vermont. — Homestead  to  the  value  of  $500.  Certain 
specific  articles  of  personal  property,  and  wages  to  the 
amount  of  $10. 

Virginia. — Homestead  to  the  value  of  $2000.  Certain 
specific  articles  of  personal  property  and  one  month's 
wages,  not  to  exceed  $50. 

Washington. — Homestead  to  the  value  of  $2000  if 
declaration  is  filed.  Certain  specific  articles  of  personal 
property,  and  in  the  case  of  a  householder  $1000  in 
addition.  Wages  to  the  amount  of  $100  if  family  is 
dependent  thereon. 

West  Virginia. — Homestead  to  the  value  of  $1000. 
Personal  property,  including  wages,  to  the  amount  of 
$200. 

Wisconsin. — ^Homestead  consisting  of  one  fourth  acre 
in  town  or  forty  acres  in  the  country.  Certain  specific 
articles  of  personal  property,  not  to  exceed  $200  in 
value.  Wages  for  three  months,  not  exceeding  $60  a 
month. 

Wyoming. — Homestead  to  the  value  of  $1500.  Per- 
sonal property  to  the  value  of  $800  for  a  married  man, 
and  $300  for  a  single  man.    Wages  not  to  exceed  $100. 

STATUTE  OF  FRAUDS 

In  the  following  states  the  statute  of  frauds  is  not 
in  force:  Alabama,  Delaware,  Illinois,  Kentucky,  North 
Carolina,  Ohio,  Pennsylvania,  Rhode  Island,  Tennessee, 
Texas,  Virginia,  West  Virginia. 

The  statute  is  not  in  force  when  contract  is  to  be 
performed  within  one  year,  in  Kansas. 

In  the  following  states  and  territories,  sale  of  goods, 
wares  and  merchandise,  to  the  value  of  $30,  must  be  in 
writing:  Arkansas,  Indian  Territory,  Maine,  Missouri, 
New  Jersey. 

State  in  which  such  amount  is  $33 :    New  Hampsnlre. 

State  in  which  such  amount  is  $40 :    Vermont. 

States  and  territories  in  which  such  amount  is  $50: 
Alaska,  Colorado,  Connecticut,  District  of  Columbia, 
Georgia,    Indiana,  Maryland,   Massachusetts,  Michigan, 


50  BUSINESS    MAN'S    ENCYCLOPEDIA, 

Minnesota,  Mississippi,  Nebraska,  Nevada,  New  York, 
North  Dakota,  Oregon,  South  Carolina,  South  Dakota, 
Washington,  Wisconsin,  Wyoming. 

Over  $50:     Oklahoma. 

Over  $200:     California,  Idaho,  Montana,  Utah. 

Over  $500;  must  be  proved  by  a  witness  and  cor- 
roborating testimony:    Louisiana. 

States  and  territories  in  which  any  value  must  be  in 
writing:     Arizona,  Florida,  Iowa,  New  Mexico. 

CHATTEL  MORTGAGES 

The  following  extracts  show  the  statutory  provisions 
as  to  chattel  mortgages  in  the  different  states  and  ter- 
ritories:— 

Alabama. — Must  be  recorded  in  the  oflace  of  the  pro- 
bate judge  where  the  mortgagor  resides  and  also  where 
the  property  is  located.  Remains  in  force  as  long  as 
the  debt.  No  renewal  necessary.  If  the  property  is 
moved  to  another  county,  the  mortgage  should  be  re- 
corded there  within  three  months.  Is  not  valid  as  to 
third  parties  on  a  stock  of  merchandise  remaining  in 
the  possession  of  the  mortgagor.  Is  not  valid  as  to 
third  parties  on  after  acquired  property. 

Arizona. — Must  be  filed  in  the  office  of  the  recorder 
where  the  mortgagor  resides  and  where  the  property  is 
located.  No  renewal  is  necessary.  Is  not  valid  as  to 
third  parties  on  stock  of  merchandise  remaining  in  pos- 
session of  mortgagor  nor  on  after  acquired  property. 

Arkansas. — Must  be  filed  or  recorded  in  the  office 
of  the  recorder  where  the  mortgagor  resides.  If  record- 
ed, is  good  for  the  life  of  the  debt,  but  in  case  of  exten- 
sion by  partial  payment,  these  payments  must  be  re- 
corded. If  it  is  filed,  it  is  valid  for  one  year  and  must 
be  renewed  within  thirty  days  preceding  the  expiration 
of  one  year.  Is  valid  as  to  third  parties  on  stock  of 
merchandise  remaining  in  possession  of  the  mortgagor, 
provided  he  acts  as  agent  for  the  mortgagee  when  sales 
are  made.  Is  valid  as  to  third  parties  on  after  acquired 
property  if  the  mortgage  provides  therefor. 

California. — Must  be  recorded  in  the  office  of  the  re- 
corder where  the  mortgagor  resides  and  where  the  prop- 


BUSINESS    LAW.  51 

erty  is  located.  Remains  in  force  during  the  life  of  the 
debt.  No  renewal  is  necessary.  If  the  property  is  re- 
moved to  another  county,  the  mortgage  should  be  record- 
ed there  within  thirty  days.  Is  valid  as  to  third  parties 
on  stock  of  merchandise  remaining  in  possession  of  the 
mortgager,  but  not  valid  on  after  acquired  property. 

Colorado. — Under  $300  it  may  be  filed  in  office  of  re- 
corder where  the  property  is  located.  In  other  cases  it 
must  be  recorded  in  the  office  of  the  recorder.  Remains 
in  force  for  two  years  on  sums  of  $2,500  or  under,  for 
five  years  on  sums  of  $2,500  to  $20,000,  for  ten  years  on 
sums  of  $20,000  or  over.  Must  be  renewed  by  annual 
statement  showing  unpaid  amounts  remaining  due. 
Mortgagee  may  take  possession  any  time  within  thirty 
days  after  maturity  and  mortgage  remains  valid  during 
that  time.  It  is  valid  as  to  third  parties  on  stock  of 
merchandise  remaining  in  possession  of  the  mortgagor 
if  the  mortgage  so  states  and  the  property  is  applied  to 
the  mortgage  debt.  It  is  also  valid  on  all  after  acquired 
property  except  merchandise. 

Connecticut. — Must  be  recorded  in  the  town  clerk's 
office  where  property  is  located.  Only  specific  articles 
are  subject  to  mortgage.  Need  not  be  renewed.  Is  not 
valid  as  to  third  parties  on  stock  of  merchandise  remain- 
ing in  possession  of  mortgagor,  or  on  after  acquired 
property. 

Delaware. — Must  be  recorded  within  ten  days  in  the 
office  of  the  recorder  where  property  is  located.  Is  valid 
for  three  years,  at  which  time  it  must  be  renewed.  Is 
valid  as  to  third  parties  on  stock  of  merchandise  remain- 
ing in  possession  of  the  mortgagor,  but  is  not  valid  on 
after  acquired  property. 

District  of  Columbia. — Must  be  recorded  in  the  office 
of  the  recorder  where  property  is  located.  Need  not  be 
renewed.  Is  not  valid  as  to  third  parties  on  stock  of 
merchandise  remaining  in  possession  of  the  mortgagor, 
or  on  after  acquired  property. 

Florida. — Must  be  recorded  in  the  office  of  the  clerk 
of  the  circuit  court  where  the  property  is  located.  Need 
not  be  renewed.  Is  not  valid  as  to  third  parties  on  stock 
of  merchandise  remaining  in  possession  of  mortgagor. 

Georgia. — Must  be  recorded  in  the  office  of  the  clerk 


52  BUSINESS    MAN'S    ENCYCLOPEDIA. 

of  the  superior  court  where  the  mortgagor  resides,  if  he 
is  a  resident,  and  if  he  is  not,  then  where  the  property 
is  located.  No  renewal  is  necessary.  Is  valid  as  to 
third  parties  on  stock  of  merchandise  remaining  in  pos- 
session of  the  mortgagor  and  on  after  acquired  property. 

Idaho. — Must  be  recorded  in  office  of  recorder  where 
the  property  is  located.  If  the  property  is  removed  to 
another  county,  mortgage  must  be  recorded  within  ten 
days.  Is  not  valid  as  to  third  parties  on  stock  of  mer- 
chandise remaining  in  possession  of  the  mortgagor  un- 
less the  proceeds  of  sale  go  to  the  mortgagee.  Is  not 
valid  on  after  acquired  property. 

Illinois. — Must  be  recorded  in  the  office  of  the  re- 
corder where  the  mortgagor  resides.  If  the  mortgagor 
does  not  reside  in  the  state,  must  be  recorded  in  the 
county  where  the  property  is  located.  Is  valid  until 
the  debt  matures  or  for  three  years  if  the  debt  has  not 
matured,  and  within  thirty  days  of  the  maturity  of  the 
debt  or  at  the  expiration  of  three  years  may  be  renewed 
by  filing  an  affidavit  showing  the  amount  due.  If  the 
mortgagor  resides  in  the  state  the  mortgage  must  be 
acknowledged  by  a  justice  of  the  peace,  in  township 
where  debtor  resides.  Is  not  valid  as  to  third  parties  on 
stock  of  merchandise  remaining  in  possession  of  the 
mortgagor  or  on  after  acquired  property. 

Indiana. — Must  be  recorded  within  ten  days  in  the  of- 
:fice  of  the  recorder  where  the  mortgagor  resides.  Need 
not  be  renewed.  Is  valid  as  to  third  parties  on  stock 
of  merchandise  remaining  in  possession  of  mortgagor. 

Indian  Territory. — Must  be  filed  or  recorded  with 
the  clerk  of  the  recording  district  where  the  property 
is  located.  If  recorded,  no  renewal  is  necessary.  If 
:filed,  it  is  not  valid  for  more  than  one  year  unless  with- 
in thirty  days  before  the  expiration  of  the  year  there 
has  been  filed  an  affidavit  that  the  mortgage  has  not 
been  paid.  It  is  valid  as  to  third  parties  on  stock  of 
m,erchandise  remaining  in  the  possession  of  the  mort- 
gagor if  the  mortgagor  acts  as  agent  for  the  mortgagee. 

Iowa. — Must  be  recorded  in  the  office  of  the  recorder 
where  the  mortgagor  resides.  On  exempt  property  the 
wife  must  join  except  for  the  purchase  price  of  the  prop- 
erty.   No  renewal  is  necessary.     It  is  valid  as  to  third 


BUSINESS    LAW.  53 

parties  on  stock  of  merchandise  remaining  in  the  pos- 
session of  the  mortgagor  and  on  after  acquired  prop- 
erty. 

Kansas. — Must  be  filed  with  the  register  of  deeds  of 
the  county  where  the  property  is  located,  and  where  the 
mortgagor  resides  if  he  resides  within  the  state.  It  is 
valid  for  two  years  from  the  date  of  filing.  Must  be 
renewed  within  thirty  days  preceding  expiration  by  affi- 
davit showing  the  amount  unpaid.  Is  valid  as  to  third 
parties  on  stock  of  merchandise  remaining  in  the  pos- 
session of  the  mortgagor  if  the  mortgagor  acts  as  agent 
for  the  mortgagee  when  sales  are  made.  Also  valid  on 
after  acquired  property  if  the  mortgage  provides 
therefor. 

Kentucky. — Must  be  recorded  with  the  county  clerk 
where  the  property  is  located.  It  is  valid  for  five  years 
after  the  maturity  of  the  debt  if  no  note  has  been  given, 
and  for  fifteen  years  where  a  note  has  been  given.  No 
renewal  is  necessary.  Is  valid  as  to  third  parties  on 
stock  of  merchandise  remaining  in  the  possession  of  the 
mortgagor  if  the  goods  can  be  identified,  but  is  not  valid 
on  after  acquired  property. 

Louisiana. — Chattel  mortgages  are  unknown  in  this 
state. 

Maine. — Must  be  recorded  in  the  office  of  the  town 
clerk  where  the  mortgagor  resides,  and  if  the  mortgagor 
does  not  reside  in  the  state  must  be  recorded  in  the 
county  where  the  property  is  situated.  No  renewal  is 
necessary.  Is  valid  as  to  third  parties  on  stock  of  mer- 
chandise remaining  in  possession  of  the  mortgagor,  but 
is  not  valid  on  after  acquired  property. 

Maryland. — Must  be  recorded  within  twenty  days  in 
the  office  of  the  clerk  of  the  circuit  court  where  the 
mortgagor  resides,  or  if  he  does  not  reside  in  the  state 
must  be  recorded  in  the  county  where  the  property  is 
located.     No  renewal  is  necessary. 

Massachusetts. — Must  be  recorded  within  fifteen  days 
with  the  town  clerk  where  the  mortgagor  resides.  If 
the  mortgagor  is  a  non-resident,  the  mortgage  must  be 
recorded  where  the  property  is  located.  No  renewal  is 
necessary.    Is  valid  as  to  third  parties  on  stock  of  mer- 


54  BUSINESS    MAN'S    ENCYCLOPEDIA. 

chandise  remaining  in  possession  of  the  mortgagor,  but 
is  not  valid  on  after  acquired  property. 

Michigan. — Must  be  filed  with  the  city  or  town  clerk 
where  the  mortgagor  resides.  Remains  in  force  for  one 
year,  and  must  be  renewed  within  thirty  days  preceding 
expiration  by  afladavit  showing  amount  unpaid.  Is 
valid  as  to  third  parties  on  stock  of  merchandise  re- 
maining in  possession  of  the  mortgagor  and  on  after 
acquired  property  if  the  mortgage  so  provides. 

Minnesota. — Must  be  filed  with  the  city,  town,  or  vil- 
lage clerk  where  the  mortgagor  resides  and  where  the 
property  is  located.  Remains  in  force  for  six  years  after 
filing  as  against  creditors  or  subsequent  mortgagees  or 
purchasers.  No  renewal  is  necessary.  Husband  and 
wife  must  join,  and  two  witnesses  and  an  acknowledg- 
ment are  necessary.  Is  not  valid  as  to  third  parties  on 
a  stock  of  merchandise  remaining  in  the  possession  of 
the  mortgagor,  but  if  the  mortgage  so  recites  it  is  valid 
on  after  acquired  property. 

Mississippi. — Must  be  recorded  with  the  chancery 
clerk  where  the  property  is  located.  If  property  is  re- 
moved, it  must  be  re-recorded  within  one  year.  No  re- 
newal is  necessary.  It  is  not  valid  as  to  third  parties 
on  stock  of  merchandise  remaining  in  possession  of  the 
mortgagor,  but  is  valid  on  after  acquired  property. 

Missouri. — Must  be  filed  or  recorded  with  the  re- 
cord where  the  mortgagor  resides.  Is  valid  for  five 
years  if  filed,  and  during  the  life  of  the  debt  if  recorded. 
No  renewal  is  necessary.  Is  not  valid  as  to  third  parties 
on  a  stock  of  merchandise  remaining  in  possession  of 
the  mortgagor  unless  the  proceeds  of  sales  go  to  the 
mortgagee  in  reducing  the  mortgage  debt.  It  is  not 
valid  on  after  acquired  property  unless  the  mortgagee 
takes  possession  before  creditors  secure  a  lien. 

Montana. — Must  be  filed  with  the  county  clerk  where 
the  mortgagor  resides.  If  he  does  not  reside  in  the  state, 
must  be  filed  in  the  county  where  the  property  is  lo- 
cated. Is  valid  until  sixty  days  after  the  debt  matures, 
not  exceeding,  however,  one  year  and  sixty  days.  Must 
be  renewed  within  sixty  days  after  the  debt  becomes  due 
by  filing  an  affidavit  in  the  office  where  the  mortgage 
is  filed,  setting  forth  the  amount  due.     Is  valid  as  to 


BUSINESS    LAW.  5U 

third  parties  on  stock  of  merchandise  remaining  ^  pos* 
session  of  the  mortgagor  if  made  in  good  faitVi  and 
proceeds  of  the  sale  go  to  the  mortgagee. 

Nebraska. — Must  be  filed  with  the  county  clerk 
where  the  mortgagor  resides,  and  if  he  does  not  reside 
in  the  state,  must  be  filed  in  the  county  where  the  prop- 
erty is  situated.  Is  valid  for  five  years  against  others 
than  the  parties,  but  it  is  not  valid  as  to  third  parties  on 
stock  of  merchandise  in  possession  of  the  mortgagor,, 
or  on  after  acquired  property. 

Nevada. — Must  be  recorded  in  the  office  of  the  re- 
corder where  the  mortgagor  resides  and  where  the. 
property  is  located.  Remains  in  force  for  six  years 
from  maturity  of  the  debt.  No  renewal  is  necessary. 
If  the  mortgage  is  recorded,  it  is  valid  as  to  third  par- 
ties on  stock  of  merchandise  remaining  in  possession  of 
the  mortgagor. 

New  Hampshire. — Must  be  recorded  with  the  town 
clerk  where  the  mortgagor  resides.  If  he  does  not  re- 
side in  the  state,  must  be  recorded  in  the  county  where 
the  property  is  situated.  No  renewal  is  necessary.  Is 
not  valid  as  to  third  parties  on  a  stock  of  merchandise 
remaining  in  the  possession  of  the  mortgagor  unless 
the  proceeds  of  this  sale  go  to  the  mortgagee  in  reduc- 
tion of  the  mortgage  debt. 

New  Jersey. — Must  be  recorded  with  the  county  clerk 
or  register  of  deeds  where  the  mortgagor  resides.  If  he 
does  not  reside  in  the  state,  must  be  recorded  in  the 
county  where  the  property  is  situated.  Need  not  be 
renewed.  If  recorded,  it  is  valid  as  to  third  parties  on 
a  stock  of  merchandise  remaining  in  possession  of  the 
mortgagor.  If  the  mortgage  so  provides  it  is  valid  on 
after  acquired  property. 

New  Mexico. — Must  be  filed  or  recorded  with  the 
probate  clerk  where  the  property  is  located.  Remains 
in  force  for  one  year.  Must  be  renewed  within  thirty 
days  preceding  its  expiration  by  affidavit  showing  the 
amount  unpaid.  Crops  can  not  be  mortgaged  until  they 
have  matured  and  are  harvested.  It  is  not  valid  as  ta 
third  parties  on  a  stock  of  merchandise  remaining  in. 
possession  of  the  mortgagor. 


S6  BUSINESS    MAN'S    ENCYCLOPEDIA. 

New  York. — Must  be  filed  with  the  register  of  New 
York  City  or  the  county  clerk  if  in  a  county  seat,  other- 
-wise  with  the  town  clerk  where  the  mortgagor  resides. 
If  the  mortgagor  does  not  reside  in  the  state,  the  mort- 
gage must  be  filed  in  the  county  where  the  property  is 
situated.  Remains  valid  for  one  year  as  against  subse- 
quent mortgagors  and  purchasers.  Must  be  renewed 
within  thirty  days  preceding  expiration  by  statement 
showing  the  amount  due.  Is  not  valid  as  to. third  par- 
ties on  a  stock  of  merchandise  remaining  in  possession 
of  the  mortgagor  unless  tlie  mortgagor  is  in  possession 
as  agent  for  the  mortgagee  and  the  sale  is  for  his  bene- 
fit.   It  is  not  valid  on  after  acquired  property. 

North  Carolina. — Must  be  recorded  with  the  register 
of  deeds  where  the  mortgagor  resides.  If  he  does  not 
reside  in  the  state,  must  be  recorded  in  the  county 
where  the  property  is  located.  No  renewal  is  necessary. 
It  is  not  valid  as  to  third  parties  on  stock  of  merchan- 
dise remaining  in  possession  of  the  mortgagor  unless 
the  mortgagor  has  possession  as  the  mortgagee's  agent 
and  the  proceeds  go  to  the  reduction  of  the  mortgage 
debt.     It  is  not  valid  on  after  acquired  property. 

North  Dakota. — Must  be  recorded  with  the  register 
of  deeds  where  the  property  is  located.  Remains  in 
force  for  three  years.  Must  be  renewed  within  ninety 
days  preceding  the  expiration  of  three  years  by  affidavit 
showing  the  amount  unpaid.  Is  valid  as  to  third  par- 
ties on  a  stock  of  merchandise  remaining  in  the  pos- 
session of  the  mortgagor  if  the  mortgagor  is  required 
to  account  to  the  mortgagee  for  the  proceeds  of  the  sale. 
It  is  also  valid  on  after  acquired  property. 

Ohio. — Must  be  filed  with  the  township  clerk,  or  the 
recorder,  if  in  the  county  seat  where  the  mortgagor  re- 
sides. If  the  mortgagor  does  not  reside  in  the  state, 
must  be  filed  in  the  county  where  the  property  is  sit- 
uated. Remains  in  force  for  one  year.  Must  be  re- 
newed within  thirty  days  after  the  expiration  by  an  af- 
ifidavit  showing  the  amount  unpaid.  Is  not  valid  as  to 
third  parties  on  stock  of  merchandise  remaining  in  pos- 
session of  the  mortgagor  unless  the  mortgagee  takes 
possession  before  the  third  party  makes  a  levy  or  un- 
less the  mortgagor  is  by  the  terms  of  the  mortgage 


BUSINESS    LAW.  57 

made  agent  for  the  mortgagee  and  required  to  account 
to  the  mortgagee  for  all  sales.  Is  not  valid  on  after 
acquired  property  unless  the  property  is  actually  deliv- 
ered to  the  mortgagee  or  the  mortgagee  takes  posses- 
sion before  other  rights  intervene. 

Oklahoma. — Must  be  filed  with  the  register  of  deeds 
where  the  mortgagor  resides  if  a  resident  of  the  state; 
if  not,  where  the  property  is  located.  Remains  in  force 
for  three  years.  Must  be  renewed  within  thirty  days, 
preceding  expiration  by  afiidavit  showing  the  'amount 
unpaid.  It  is  valid  as  to  third  parties  on  stock  of  mer- 
chandise remaining  in  possession  of  the  mortgagor,  but 
is  not  valid  on  after  acquired  property. 

Oregon. — Must  be  filed  or  recorded  with  the  county 
clerk  where  the  mortgagor  resides.  If  he  does  not  reside 
in  the  state,  must  be  filed  or  recorded  in  the  county 
where  the  property  is  located.  Remains  in  force  for 
one  year  and  must  be  renewed  within  thirty  days  pre- 
ceding expiration  by  affidavit  showing  the  amount  un- 
paid, unless  it  is  executed  and  acknowledged  as  a  real 
estate  mortgage  and  recorded,  in  which  case  no  renewal 
is  required.  Is  not  valid  as  to  third  parties  on  stock 
of  merchandise  remaining  in  possession  of  the  mortga- 
gor or  on  after  acquired  property. 

Pennsylvania. — Must  be  recorded  with  the  county  re- 
corder or  register  where  the  mortgagor  resides.  If  the 
mortgagor  does  not  reside  in  the  state,  must  be  recorded 
in  the  county  where  the  property  is  located.  Only  spe- 
cific articles  can  be  mortgaged.  Must  be  renewed  within 
three  months  after  maturity.  Is  not  valid  as  to  third 
parties  on  stock  of  merchandise  remaining  in  possession 
of  the  mortgagor  or  on  after  acquired  property. 

Rhode  Island.— rMvLSt  be  recorded  with  the  town  clerk 
where  the  mortgagor  resides.  If  he  does  not  reside  in 
the  state,  must  be  recorded  in  the  county  where  the 
property  is  located.  No  renewal  is  necessary.  If  prop- 
erly recorded,  it  is  valid  as  to  third  parties  on  stock  of 
merchandise  remaining  in  the  possession  of  the  mort- 
gagor, but  is  not  valid  on  after  acquired  property  as 
against  creditors  who  secure  a  lien  before  the  mort- 
gagee takes  possession. 


58  BUSINESS    MAN'S    ENCYCLOPEDIA, 

South  Carolina. — Must  be  recorded  within  forty  days 
with  the  register  of  conveyances  where  the  mortgagor 
resides.  If  he  does  not  reside  in  the  state,  must  be  re- 
corded in  the  county  where  the  property  is  located.  No 
renewal  is  necessary.  It  is  valid  as  to  third  parties  on 
stock  of  merchandise  remaining  in  the  possession  of  the 
mortgagor  and  also  on  after  acquired  property. 

South  Dakota. — Must  be  filed  with  the  register  of 
deeds  where  property  is  located.  Remains  in  force  for 
three  years.  Must  be  renewed  within  thirty  days  pre- 
ceding expiration  by  an  affidavit  showing  the  amount 
unpaid.  It  is  valid  as  to  third  parties  on  stock  of  mer- 
chandise remaining  in  the  possession  of  the  mortgagor, 
provided  the  mortgagor  is  required  to  account  to  the 
mortgagee  for  the  proceeds  of  sales.  It  is  also  valid  on 
after  acquired  property. 

Tennessee. — Must  be  filed  or  recorded  with  the  reg- 
ister of  deeds  where  the  mortgagor  resides.  If  he  does 
not  reside  in  the  state,  must  be  filed  or  recorded  in  the 
county  where  the  property  is  located.  Remains  in  force 
for  six  years.  Need  not  be  renewed.  Is  not  valid  as  to 
third  parties  on  a  stock  of  merchandise  remaining  in 
the  possession  of  the  mortgagor,  nor  on  after  acquired 
property. 

Texas. — Must  be  filed  with  the  county  clerk  where 
the  mortgagor  resides.  If  he  does  not  reside  in  the 
state,  piust  be  filed  in  the  county  where  the  property  is 
located.  Need  not  be  renewed.  Is  not  valid  as  to  third 
parties  on  stock  of  merchandise  remaining  in  the  pos- 
session of  the  mortgagor. 

Utah. — Must  be  recorded  in  the  office  of  the  recorder 
where  the  mortgagor  resides.  If  he  does  not  reside  in 
the  state,  must  be  recorded  in  the  county  where  the 
property  is  located.  Remains  in  force  for  one  year. 
Must  be  renewed  within  thirty  days  after  one  year  from 
filing  by  affidavit  showing  amount  unpaid.  It  is  not 
valid  after  five  years.  Is  not  valid  as  to  third  parties 
on  stock  of  merchandise  remaining  in  possession  of  the ' 
mortgagor. 

Vermont. — Must  be  recorded  in  the  city  or  town 
clerk's  office  where  the  mortgagor  resides.  If  he  does 
not  reside   in  the   state,  must  be  filed  in   the  county 


BUSINESS    LAW,  59 

where  the  property  is  situated.  Need  not  be  renewed. 
It  is  valid  as  to  third  parties  on  stock  of  merchandise 
remaining  in  possession  of  the  mortgagor.  If  posses- 
sion is  taken,  it  is  valid  on  after  acquired  property. 

Virginia. — ^Must  be  recorded  in  the  county  or  city 
clerk's  office  where  the  property  is  located.  Need  not 
be  renewed.  Is  not  valid  as  to  third  parties  on  stock 
of  merchandise  remaining  in  possession  of  the  mort- 
gagor unless  the  mortgagor  has  possession  as  mort- 
gagee's agent,  and  the  proceeds  go  to  the  reduction  of 
the  mortgage  debt,  but  it  is  not  valid  on  after  acquired 
property. 

Washington, — Must  be  filed  and  recorded  with  the 
county  auditor  where  the  property  is  located.  Remains 
in  force  for  two  years  if  less  than  $300;  if  over  $300, 
for  the  life  of  the  debt.  May  be  renewed  within  two 
years  by  an  affidavit  showing  the  amount  unpaid.  It 
is  valid  as  to  third  parties  on  stock  of  merchandise  re- 
maining in  possession  of  the  mortgagor,  but  the  mort- 
gage should  be  so  drawn  that  the  mortgagor  must  apply 
sales  in  payment  of  mortgage  debt.  It  is  valid  on  after 
acquired  property. 

West  Virginia. — Must  be  recorded  with  the  county 
clerk  where  the  property  is  located,  and  if  property  is 
removed  must  be  re-recorded  within  three  months.  No 
renewal  is  necessary.  It  is  not  valid  as  to  third  parties 
on  stock  of  merchandise  remaining  in  possession  of  the 
mortgagor,  nor  is  it  valid  on  after  acquired  property. 

Wisconsin. — Must  be  filed  with  the  city  or  town  clerk 
where  the  mortgagor  resides.  If  he  does  not  reside  in 
the  state,  must  be  filed  in  county  where  property  is  lo- 
cated. Remains  in  force  for  two  years.  Must  be  re- 
newed within  thirty  days  preceding  the  expiration  by  an 
affidavit  showing  the  amount  unpaid.  It  is  valid  as  to 
third  parties  on  stock  of  merchandise  remaining  in  pos- 
session of  the  mortgagor,  provided  sworn  statements 
are  filed  every  sixty  days,  showing  amount  of  goods 
sold,  amount  added,  and  payment  made  on  mortgage 
debt,  but  is  not  valid  on  after  acquired  property. 

Wyoming. — Must  be  recorded  in  the  county  clerk's 
office  where  the  property  is  located.  Remains  in  force 
for  two  months  after  the  debt  is  due.     If  property  is 


60  BUSINESS    MAN'S    ENCYCLOPEDIA, 

removed,  mortgage  must  be  re-recorded.  Must  be  re- 
newed within  sixty  days  after  maturity  of  the  secured 
debt.  It  is  valid  as  to  third  parties  on  stock  of  mer- 
chandise remaining  in  the  possession  of  the  mortgagor, 
provided  the  proceeds  of  the  sales  are  applied  to  the 
debt  secured.    It  is  also  valid  on  after  acquired  property. 

ACKNOWLEDGEMENT  OF  DEEDS 

An  acknowledgment  is  the  act  of  declaring  the  exe- 
cution of  an  instrument,  but  the  word  also  denotes  the 
official  certificate  of  such  declaration.  All  deeds  and 
conveyances  of  land  to  be  effectual  as  to  third  parties 
must  be  recorded  upon  previous  proof  or  acknowledg- 
ment of  their  execution.  Erasures  and  interlineations 
should  be  noted  previous  to  the  execution,  or  referred  to 
in  the  certificate  of  the  officer  taking  the  acknowledg- 
ment. It  is  advisable  to  comply  with  the  form  of  ac- 
knowledgment prescribed  by  the  statutes  of  the  various 
states. 

Within  the  several  states  acknowledgments  may  be 
taken  in  geaeral  before  the  following  officers:  Notaries 
public  and  justices  of  the  peace  generally  within  their 
territorial  jurisdiction,  and  in  any  place  of  the  state 
usually  before  judges  and  clerks  of  the  supreme,  circuit, 
probate,  and  county  courts,  judges  of  the  United  States 
courts,  chancellors,  registers,  masters  in  chancery,  and 
court  commissioners;  county  recorders,  town  clerks  and 
their  assistants.  United  States  commissioners,  county 
surveyors,  county  auditors,  registers  of  deeds,  mayors, 
and  clerks  of  incorporated  cities  may  take  acknowledg- 
ments within  their  jurisdiction;  besides  the  foregoing, 
in  several  states  also  the  deputies  of  the  enumerated 
officers,  and  in  Connecticut,  commissioners  of  the  school 
fund;  in  Louisiana,  parish  recorders  and  their  deputies; 
in  Maine,  women  appointed  by  the  governor  for  that 
purpose;  in  Michigan,  members  of  the  legislature;  in 
Mississippi,  members  of  county  board  of  supervisors; 
in  Nebraska,  the  secretary  of  state;  in  New  York,  re- 
corders of  cities  and  commissioners  of  deeds;  in  Penn- 
sylvania, mayors,  recorders,  and  aldermen  of  Philadel- 
phia, Pittsburgh,  Allegheny,  and  Carbondale;  in  Rhode 


4fvas^.  if,  U5aa 


BUSINESS    LAW,  61 

Island,  state  senators ;  in  Vermont,  registers  of  probate ; 
in  West  Virginia,  prothonotaries;  in  Wisconsin,  police 
justices. 

Without  the  state  and  within  the  United  States,  the 
following  officers  are  authorized  to  take  acknowledg- 
ment: Judges  and  clerks  of  courts  of  record,  notaries 
public,  commissioners  appointed  for  that  purpose  by  the 
governors,  and  officers  authorized  to  take  acknowledg- 
ments within  their  respective  states.  Besides  the  fore- 
going, also,  in  Colorado,  secretaries  of  state;  in  Dela- 
ware, mayors  of  cities;  in  Illinois,  justices  of  the  peace, 
commissioners  of  deeds,  and  mayors  of  cities;  in  Ken- 
tucky, secretaries  of  state;  in  Michigan  and  Wisconsin, 
master  in  chancery;  in  New  Jersey,  New  York,  North 
Carolina,  Pennsylvania,  and  Rhode  Island,  mayors  and 
chief  magistrates  of  cities. 

Without  the  United  States,  the  following  officers  may 
take  acknowledgment:  Judges  of  courts  of  record, 
mayors  or  chief  magistrates  of  cities,  towns,  boroughs, 
counties,  notaries  public,  diplomatic,  consular,  or  com- 
mercial agents  of  the  United  States  resident  and  accred- 
ited in  the  country  where  the  acknowledgment  is  taken. 

The  forms  of  deeds  conveying  land  are  prescribed 
by  several  states,  and  such  forms  should  be  generally 
used.  The  requisites  of  a  valid  deed  are:  (1)  Compe- 
tent parties;  (2)  consideration;  (3)  the  deed  must  be 
reduced  to  writing;  (4)  it  must  be  duly  executed  and 
delivered.  The  mode  and  effect  of  an  acknowledgment 
or  of  a  deed  is  governed  by  the  law  of  the  state  where 
the  land  lies,  and  not  by  that  of  the  place  where  the 
acknowledgment  is  taken.  Where  the  deed  is  executed 
by  an  attorney  in  fact,  it  is  customary  to  have  the  power 
of  attorney  acknowledged  by  the  principal  and  the  deed 
acknowledged  by  the  attorney.  A  deed  executed  by  sev- 
eral grantors  should  be  acknowledged  by  each  of  them. 

Seals  or  their  equivalent  (or  whatever  is  intended  as 
such)  are  necessary  in  Alaska,  Connecticut,  Delaware, 
District  of  Columbia,  Florida,  Idaho,  Illinois,  Maine, 
Maryland,  Massachusetts,  Michigan,  Minnesota,  Mis- 
souri, New  Hampshire,  New  Jersey,  New  York,  North 
Carolina,  Oregon,  Pennsylvania,  South  Carolina, Vermont, 
Virginia,  West  Virginia,  Wisconsin,  Wyoming.  In  almost 


62  BUSINESS    MAN'S    ENCYCLOPEDIA. 

all  the  states  deeds  by  corporations  must  be  under  seal. 
Forms  are  prescribed  or  indicated  by  the  statutes  of  most 
of  the  states  except  Connecticut,  Florida,  Louisiana.  Sep- 
arate acknowledgment  by  wife  is  required  in  Alaska, 
Arkansas,  Delaware,  District  of  Columbia,  Florida,  Geor- 
gia, Idaho,  Kentucky,  Louisiana,  Montana,  Nevada,  New 
Jersey,  North  Carolina,  Oregon,  Pennsylvania,  South 
Carolina,  Tennessee,  Texas.  One  witness  to  the  execu- 
tion of  deeds  is  required  in  District  of  Columbia,  Maine 
(customary),  Maryland,  Nebraska,  New  Jersey  (usual), 
Oklahoma  Territory,  Utah,  Wyoming.  Two  witnesses 
to  the  execution  of  deeds  are  required  in  Arkansas, 
Connecticut,  Florida,  Georgia,  Louisiana,  Michigan,  Min- 
nesota, New  Hampshire,  Ohio,  Oregon,  South  Carolina, 
Texas,  Vermont,  Wisconsin. 

WILLS 

A  will  or  testament  is  a  final  disposition  of  a  per- 
son's property  to  take  effect  after  his  death.  A  codicil 
is  an  addition  or  alteration  in  such  disposition.  All  per- 
sons are  competent  to  make  a  will  except  idiots,  per- 
sons of  unsound  mind,  and  infants.  In  many  states  a 
will  of  an  unmarried  woman  is  deemed  revoked  by  her 
subsequent  marriage.  A  nuncupative  or  unwritten  will 
is  one  made  by  a  soldier  in  active  service,  or  by  a 
mariner  while  at  sea. 

In  most  of  the  states  a  will  must  be  in  writing,  signed 
by  the  testator,  or  by  some  person  in  his  presence,  and 
by  his  direction,  and  attested  by  witnesses,  who  must 
subscribe  their  names  thereto  in  the  presence  of  the 
testator.  The  form  of  wording  a  will  is  immaterial  as 
long  as  its  intent  is  clear. 

Age  at  which  persons  may  make  wills  is  in  most  of 
the  states  21  years.  Males  and  females  are  competent 
to  make  wills  at  18  years  in  the  following  states:  Cali- 
fornia, Connecticut,  Hawaiian  Islands,  Idaho,  Montana, 
Nevada,  North  Dakota,  Oklahoma  Territory,  South  Da- 
kota, Utah;  and  in  the  following  states  only  females 
at  18  years:  Colorado,  District  of  Columbia,  Ilinois, 
Maryland,  Missouri,  Washington,  Wisconsin. 

In  the  following  states  persons  of  18  years  may  dis- 
pose of  personal  property  only:     Alabama,  Arkansas, 


BUSINESS    LAW.  63 

Missouri,  Oregon,  Rhode  Island,  Virginia,  West  Virginia; 
in  Georgia  any  one  over  14  years  and  in  Louisiana  any 
one  over  16  years  is  competent  to  make  a  will.  In  Col- 
orado persons  of  17  years,  and  in  New  York  males  of 
18  and  females  of  16  years  may  dispose  of  personalty. 
Witnesses. — Most  of  the  states  require  two  witnesses, 
except  in  Connecticut  (3),  District  of  Columbia  (3), 
Maine  (3),  Massachusetts  (3),  New  Hampshire  (3), 
South  Carolina  (3),  Vermont  (3). 

THE  BANKRUPTCY  LAW 

Who  May  Become  Bankrupts. — (a)  Any  person  who 
owes  debts,  except  a  corporation,  shall  be  entitled  to 
the  benefits  of  this  act  as  a  voluntary  bankrupt,  (b) 
Any  natural  person  (except  a  wage-earner  or  a  person 
engaged  chiefly  in  farming  or  the  tillage  of  the  soil), 
any  unincorporated  company,  and  any  corporation  en- 
gaged principally  in  manufacturing,  trading,  printing, 
publishing,  or  mercantile  pursuits,  owing  debts  to  the 
amount  of  one  thousand  dollars  or  over,  may  be  ad- 
judged an  involuntary  bankrupt  upon  default  or  an  im- 
partial trial,  and  shall  be  subject  to  the  provisions  and 
entitled  to  the  benefits  of  this  act.  Private  bankers, 
but  not  national  banks  or  banks  incorporated  under 
state  or  territorial  laws,  may  be  adjudged  involuntary 
bankrupts. 

Duties  of  Bankrupts. — (a)  The  bankrupt  shall 
(1)  attend  the  first  meeting  of  his  creditors,  if  directed 
by  the  court  or  a  judge  thereof  to  do  so,  and  the  hearing 
upon  his  application  for  a  discharge,  if  filed;  (2)  com- 
ply with  all  lawful  orders  of  the  court;  (3)  examine  the 
correctness  of  all  proofs  of  claims  filed  against  his  es- 
tate; (4)  execute  and  deliver  such  papers  as  shall  be 
ordered  by  the  court;  (5)  execute  to  his  trustee  trans- 
fers of  all  his  property  in  foreign  countries;  (6)  imme- 
diately inform  his  trustee  of  any  attempt,  by  his  credit- 
ors or  other  persons,  to  evade  the  provisions  of  this  act, 
coming  to  his  knowledge;  (7)  in  case  of  any  person 
having  to  his  knowledge  proved  a  false  claim  against  his 
estate,  disclose  that  fact  immediately  to  his  trustee; 
(8)  prepare,  make  oath  to,  and  file  in  court  within  ten 
days,  unless  further  time  is  granted,  after  the  adjudica- 


64  BUSINESS    MAN'S    ENCYCLOPEDIA. 

tion  if  an  involuntary  bankrupt,  and  with  the  petition  if 
a  voluntary  bankrupt,  a  schedule  of  his  property,  show- 
ing the  amount  and  kind  of  property,  the  location  there- 
of, its  money  value  in  detail,  and  a  list  of  his  creditors, 
showing  their  residences,  if  known  (if  unknown  that 
fact  to  be  stated),  the  amount  due  each  of  them,  the 
consideration  thereof,  the  security  held  by  them,  if  any, 
and  a  claim  for  such  exemptions  as  he  may  be  entitled 
to,  all  in  triplicate,  one  copy  of  each  for  the  clerk,  one 
for  the  referee,  and  one  for  the  trustee;  and  (9)  when 
present  at  the  first  meeting  of  his  creditors,  and  at  such 
other  times  as  the  court  shall  order,  submit  to  an  ex- 
amination concerning  the  conducting  of  his  business, 
the  cause  of  his  bankruptcy,  his  dealings  with  his  cred- 
itors and  other  persons,  the  amount,  kind,  and  where- 
abouts of  his  property,  and,  in  addition,  all  matters 
which  may  affect  the  administration  and  settlement  of 
his  estate;  but  no  testimony  given  by  him  shall  be 
offered  in  evidence  against  him  in  any  criminal  pro- 
ceedings. 

Provided,  however,  that  he  shall  not  be  required  to 
attend  a  meeting  of  his  creditors,  or  at  or  for  an  ex- 
amination at  a  place  more  than  one  hundred  and  fifty 
miles  distant  from  his  home  or  principal  place  of  busi- 
ness, or  to  examine  claims  except  when  presented  to 
him,  unless  ordered  by  the  court,  or  a  judge  thereof, 
for  cause  shown,  and  the  bankrupt  shall  be  paid  his 
actual  expenses  from  the  estate  when  examined  or  re- 
quired to  attend  at  any  place  other  than  the  city,  town, 
or  village  of  his  residence. 

THE   NEW  DEPARTMENT  OF 

COMMERCE  AND  LABOR 

The  Department  of  Commerce  and  Labor  was  estab- 
lished by  Chapter  552  of  the  Acts  of  the  Fifty-seventh 
Congress,  approved  February  14,  1903.  The  act  pro- 
vides that  there  shall  be  at  the  seat  of  government  an 
executive  department  to  be  known  as  the  Department 
of  Commerce  and  Labor,  headed  by  a  Secretary  of  Com- 
merce and  Labor,  appointed  by  the  President  at  a  sal- 
ary  of  $8,000   per   annum.     An   assistant   secretary   at 


BUSINESS    LAW.  65 

$5,000  a  year,  a  chief  clerk,  a  disbursing  clerk,  and 
other  clerical  assistants  as  authorized  shall  be  ap- 
pointed. 

The  duty  of  this  department  shall  be  to  foster,  pro- 
mote, and  develop  the  foreign  and  domestic  commerce, 
the  mining,  manufacturing,  and  shipping  and  fishing 
industries,  the  labor  interests,  and  the  transportation 
facilities  of  the  United  States.  To  this  end  there  shall 
be  transferred  to  the  Department  of  Commerce  and  La- 
bor from  the  jurisdiction  of  the  Treasury  Department, 
the  Light-House  Board  and  Establishment,  the  Steam- 
boat-Inspection Service,  the  Bureau  of  Navigation,  the 
United  States  Shipping  Commissioners,  the  National 
Bureau  of  Standards,  the  Coast  and  Geodetic  Survey, 
the  Commissioner-General  and  Commissioners  of  Immi- 
gration and  the  Immigration  Bureau  and  service  at 
large  and  the  Bureau  of  Statistics.  From  the  Depart- 
ment of  Interior  the  Census  Office  is  transferred  to  the 
new  department.  The  Department  of  Labor,  the  Fish 
Commission.  The  Bureau  of  Foreign  Commerce  of  the 
Department  of  State  shall  also  be  transferred  and  maae 
a  part  of  the  Bureau  of  Statistics  before  mentioned. 

There  shall  also  be  created  a  Bureau  of  Manufac- 
tures to  foster  and  promote  that  industry  by  compiling 
and  publishing  information  concerning  it  at  home  and 
abroad,  consular  offices  and  agents  to  assist  in  gath- 
ering the  material. 

A  Bureau  of  Corporations  is  also  created  to  investi- 
gate the  organization,  conduct,  and  management  of  the 
business  of  any  corporation,  joint  stock  company,  or 
corporate  combination  engaged  in  commerce  among  the 
several  states  and  with  foreign  nations,  except  certain 
common  carriers.  The  commissioner  shall  have  for 
this  purpose  the  powers  conferred  upon  the  Interstate 
Commerce  Commission.  It  is  also  the  duty  of  this  bu- 
reau to  gather,  compile,  publish,  and  supply  useful  in- 
formation concerning  corporations  doing  business  in  the 
United  States,  including  insurance  companies. 

The  heads  of  the  new  bureaus  shall  be  appointed  by 
the  President  at  salaries  of  $4,000  a  year  for  the  Bureau 
of  Manufacture,  and  $5,000  for  the  Bureau  of  Corpora- 
tions, the  latter  to  have  a  deputy  at  a  salary  of  $3,500. 


66  BUSINESS    MAN'S    ENCYCLOPEDIA, 

The  control  of  the  salmon,  seal,  and  other  fisheries  in 
Alaska  and  of  the  immigration  of  aliens  into  the  United 
States  is  also  to  be  transferred  from  the  Treasury  De- 
partment to  the  Department  of  Commerce  and  Labor. 

The  secretary  of  the  department  shall  report  in 
writing  to  Congress  at  the  close  of  each  fiscal  year, 
enumerating  receipts  and  disbursements,  describing  the 
work  accomplished,  and  making  recommendations.  The 
President  is  authorized  to  transfer  to  the  Department 
of  Commerce  and  Labor  at  any  time  the  whole  or  any 
part  of  any  office  or  bureau  engaged  in  scientific  or 
statistical  work  in  any  of  the  other  departments  of  the 
Government.  The  secretary  of  the  new  department 
shall  also  make  special  investigations  and  reports  when 
requested  by  Congress  or  the  President  or  which  he  him- 
self may  deem  necessary  and  urgent. 

PATENT  OFFICE  PROCEDURE 

Patents  are  issued  in  the  name  of  the  United  States, 
and  under  the  seal  of  the  Patent  Office,  to  any  person 
who  has  invented  or  discovered  any  new  and  useful 
art,  machine,  manufacture,  or  composition  of  matter  or 
any  new  and  useful  improvement  thereof,  not  known  or 
used  by  others  in  this  country  before  his  invention  or 
discovery  thereof  and  not  patented  or  described  in  any 
printed  publication  in  this  or  any  foreign  country,  before 
his  invention  or  discovery  thereof  or  more  than  two 
years  prior  to  his  application,  and  not  in  public  use  or 
on  sale  in  the  United  States  for  more  than  two  years 
prior  to  his  application,  unless  the  same  is  proved  to 
have  been  abandoned;  and  by  any  person  who,  by  his 
own  industry,  genius,  efforts,  and  expense,  has  invented 
and  produced  any  new  and  original  design  for  a  manu- 
facture, bust,  statue,  alto-relievo,  or  bas-relief;  any  new 
ornamental  and  original  design  for  an  article  of  manu- 
facture; the  same  not  having  been  known  nor  used  by 
others  before  his  invention  or  i  'oduction  thereof,  nor 
patented  nor  described  in  any  pr  ated  publication,  upon 
payment  of  the  fees  required  by  law  and  other  due 
proceedings  had. 

Every  patent  contains  a  grant  to  the  patentee,  his 
heirs  or  assigns,  for  the  term  of  seventeen  years,  ex- 


BU8INES8    LAW.  67 

cept  in  the  case  of  design  patents,  of  the  exclusive  right 
to  make,  use,  and  vend  the  invention  or  discovery 
throughout  the  United  States  and  the  territories  re- 
ferring to  the  specification  for  the  particulars  thereof. 

If  it  appear  that  the  inventor,  at  the  time  of  making 
his  application,  believed  himself  to  be  the  first  inventor 
or  discoverer,  a  patent  will  not  be  refused  on  account 
of  the  invention  or  discovery,  or  any  part  thereof,  having 
been  known  or  used  in  any  foreign  country  before  his 
invention  or  discovery  thereof,  if  it  had  not  been  before 
patented  or  described  in  any  printed  publication. 

Joint  inventors  are  entitled  to  a  joint  patent;  neither 
can  claim  one  separately.  Independent  inventors  of 
distinct  and  independent  improvements  in  the  same  ma- 
chine cannot  obtain  a  joint  patent  for  their  separate 
inventions;  nor  does  the  fact  that  one  furnishes  the 
capital  and  another  makes  the  invention  entitle  them  to 
make  application  as  joint  inventors;  but  in  such  case 
they  may  become  joint  patentees. 

No  person  otherwise  entitled  thereto  will  be  de- 
barred from  receiving  a  patent  for  his  invention  or  dis- 
covery, by  reason  of  its  having  been  first  patented  or 
caused  to  be  patented  by  the  inventor  or  his  legal  rep- 
resentatives or  assigns  in  a  foreign  country,  unless  the 
application  for  said  foreign  patent  was  filed  more  than 
twelve  months  prior  to  the  filing  of  the  application  in 
this  country,  in  which  case  no  patent  shall  be  granted 
in  this  country. 

Applications, — Applications  for  a  patent  must  be 
made  in  writing  to  the  Commissioner  of  Patents.  The 
applicant  must  also  file  in  the  Patent  Office  a  written 
description  of  the  invention  or  discovery,  and  of  the 
manner  and  process  of  making,  constructing,  compound- 
ing, and  using  it,  in  such  full,  clear,  concise,  and  exact 
terms  as  to  enable  any  person  skilled  in  the  art  or 
science  to  which  it  appertains,  or  with  which  it  is  most 
nearly  connected,  to  make,  construct,  compound,  and 
use  the  same;  and  in  case  of  a  machine,  he  must  ex- 
plain the  principle  thereof,  and  the  best  mode  in  which 
he  has  contemplated  applying  that  principle,  so  as  to 
distinguish  it  from  other  inventions,  and  particularly 
point  out  and  distinctly  claim  the  part,  improvement, 


68  BUSINESS    MAN'S    ENCYCLOPEDIA, 

or  combination  which  he  claims  as  his  invention  or 
discovery.  The  specification  and  claim  must  be  signed 
by  the  inventor  and  attested  by  two  witnesses. 

When  the  nature  of  the  case  admits  of  drawings, 
the  applicant  must  furnish  a  drawing  of  the  required 
size,  signed  by  the  inventor  or  his  attorney  in  fact,  and 
attested  by  two  witnesses.  In  all  cases  which  admit  of 
representation  by  model,  the  applicant,  if  required  by 
the  Patent  Office,  shall  furnish  a  model  of  convenient 
size  to  exhibit  advantageously  the  several  parts  of  his 
invention  or  discovery. 

The  applicant  shall  make  oath  that  he  verily  believes 
himself  to  be  the  original  and  first  inventor  or  discov- 
erer of  the  art,  machine,  manufacture,  composition,  or 
improvement  for  which  he  solicits  a  patent;  that  he 
does  not  know  and  does  not  believe  that  the  same 
was  ever  before  known  or  used,  and  shall  state  of 
what  country  he  is  a  citizen  and  where  he  resides.  In 
every  original  application  the  applicant  must  distinctly 
state  under  oath  that  the  invention  has  not  been  pat- 
ented to  himself  or  to  others  with  his  knowledge  or 
consent  in  this  or  any  foreign  country  for  more  than 
two  years  prior  to  his  application,  or  on  an  application 
for  a  patent  filed  in  any  foreign  country  by  himself 
or  his  legal  representatives  or  assigns  more  than  twelve 
months  prior  to  his  application  in  this  country.  If  any 
application  for  patent  has  been  filed  in  any  foreign 
country  by  the  applicant  in  this  country  or  by  his  legal 
representatives  or  assigns,  prior  to  his  application  in 
this  country,  he  shall  state  the  country  or  countries  in 
which  such  application  has  been  filed,  giving  the  date 
of  such  application,  and  shall  also  state  that  no  appli- 
cation has  been  filed  in  any  other  country  or  countries 
than  those  mentioned;  that  to  the  best  of  his  knowledge 
and  belief  the  invention  has  not  been  in  public  use  or 
on  sale  in  the  United  States  nor  described  in  any  printed 
publication  or  patent  in  this  or  any  foreign  country  for 
more  than  two  years  prior  to  his  application  in  this 
country.  Such  oath  may  be  made  before  any  persou 
within  the  United  States  authorized  by  law  to  adminis- 
ter oaths,  or,  when  the  applicant  resides  in  a  foreign 
country,  beiore  any  minister,  charge  d'affaires,  consul. 


BUSINESS    LAW,  69 

or  commercial  agent  holding  commission  under  the 
Government  of  the  United  States,  or  before  any  notary- 
public  of  the  foreign  country  in  which  the  applicant  may 
be,  provided  such  notary  is  authorized  by  the  laws  of 
his  country  to  administer  oaths. 

On  the  filing  of  such  application  and  the  payment  of 
the  fees  required  by  law,  if,  on  examination,  it  appears 
that  the  applicant  is  justly  entitled  to  a  patent  under 
the  law,  and  that  the  same  is  sufficiently  useful  and 
Important,  the  commissioner  will  issue  a  patent  there- 
for. 

Every  patent  or  any  interest  therein  shall  be  as- 
signable in  law  by  an  instrument  in  writing;  and  the 
patentee  or  his  assigns  or  legal  representatives  may,  in 
like  manner,  grant  and  convey  an  Exclusive  right  under 
his  patent  to  the  whole  or  any  specified  part  of  the 
United  States. 

Reissues. — A  reissue  is  granted  to  the  original  pat- 
entee, his  legal  representatives,  or  the  assignees  of  the 
entire  interest  when,  by  reason  of  a  defective  or  insuf- 
ficient specification  or  by  reason  of  the  patentee  claim- 
ing as  his  invention  or  discovery  more  than  he  had  a 
right  to  claim  as  new,  the  original  patent  is  inoperative 
or  invalid,  provided  the  error  has  arisen  from  inad- 
vertence, accident,  or  mistake,  and  without  any  fraudu- 
lent or  deceptive  intention.  Reissue  applications  must 
be  made  and  the  specifications  sworn  to  by  the  invent- 
ors, if  they  be  living. 

Caveats. — A  caveat,  under  the  patent  law,  is  a  notice 
given  to  the  office  of  the  caveator's  claim  as  inventor, 
in  order  to  prevent  the  grant  of  a  patent  to  another  for 
the  same  alleged  invention  upon  an  application  filed 
during  the  life  of  a  caveat  without  notice  to  the 
caveator. 

Any  person  who  has  made  a  new  invention  or  dis- 
covery, and  desires  further  time  to  mature  the  same, 
may,  on  payment  of  a  fee  of  ten  dollars,  file  in  the 
Patent  Offce  a  caveat  setting  forth  the  object  and  the 
distinguishing  characteristics  of  the  invention,  and  pray- 
ing protection  of  his  right  until  he  shall  have  matured 
his  invention.  Such  caveat  shall  be  filed  In  the  confi- 
dential archives  of  the  oflice  and  preserved  in  secrecy. 


70  BUSINESS    MAWS    ENCYCLOPEDIA. 

and  shall  be  operative  for  the  term  of  one  year  from 
the  filing  thereof.  The  caveat  may  be  renewed,  on  re- 
quest in  writing,  by  the  payment  of  a  second  fee  of  ten 
dollars,  and  it  will  continue  in  force  for  one  year  from 
the  payment  of  such  second  fee. 

The  caveat  must  comprise  a  specification,  oath,  and, 
when  the  nature  of  the  case  admits  of  it,  a  drawing, 
and,  like  the  application,  must  be  limited  to  a  single 
invention  or  improvement. 

Fees. — Fees  must  be  paid  in  advance,  and  are  as  fol- 
lows: On  filing  each  original  application  for  a  patent, 
$15.  On  issuing  each  original  patent,  $20.  In  design 
cases:  For  three  years  and  six  months,  $10;  for  seven 
years,  $15;  for  fourteen  years,  $30.  On  filing  each 
caveat,  $10.  On  every  application  for  the  reissue  of 
a  patent,  $30.  On  filing  each  disclaimer,  $10.  For  cer- 
tified copies  of  patents  and  other  papers  in  manuscript, 
ten  cents  per  hundred  words  and  twenty-five  cents  for 
the  certificate,  for  certified  copies  of  printed  patents, 
eighty  cents.  For  uncertified  printed  copies  of  specifi- 
cations and  drawings  of  patents,  for  single  copies,  or 
any  number  of  unclassified  copies,  five  cents  each;  for 
copies  by  subclasses,  three  cents  each;  by  classes,  two 
cents  each,  and  for  the  entire  set  of  patents  issued,  in 
one  order,  one  cent  each.  For  recording  every  assign- 
ment, agreement,  power  of  attorney,  or  other  paper,  of 
three  hundred  words  or  under,  $1;  of  over  three  hun- 
dred and  under  one  thousand  words,  $2;  of  over  one 
thousand  words,  $3.  For  copies  of  drawings,  the  reason- 
able cost  of  making  them.  The  Patent  Office  is  pre- 
pared to  furnish  positive  photographic  copies  of  any 
drawing,  foreign  or  domestic,  in  the  possession  of  the 
office,  in  sizes  and  at  rates  as  follows:  Large  size, 
10x15  inches,  twenty-five  cents;  medium  size,  7x11 
inches,  fifteen  cents.  Fee  for  examining  and  registering 
trade  mark,  $25,  which  includes  certificate.  Stamps 
cannot  be  accepted  by  the  Patent  Office  in  payment  of 
fees.  Stamps  and  stamped  envelopes  should  not  be  sent 
to  the  office  for  replies  to  letters,  as  stamps  are  not 
required  on  mail  matter  emanating  from  the  Patent 
Office. 


BUSINESS    LAW,  71 

COPYRIGHT  LAW  OF  THE  UNITED  STATES 

Section  4952  of  the  Revised  Statutes  of  the  United 
States,  in  force  December  1,  1873,  as  amended  by  the 
act  of  June  18,  1874,  as  amended  by  the  act  of  March  3, 
1891,  provides  that  the  author,  inventor,  designer,  or 
proprietor  of  any  booli,  map,  chart,  dramatic  or  musical 
composition,  engraving,  cut,  print,  or  photograph  or 
negative  thereof,  or  of  a  painting,  drawing,  chromo, 
statuary,  and  of  models  or  designs  intended  to  be  per- 
fected as  works  of  the  fine  arts,  and  the  executors, 
administrators,  or  assigns  of  any  such  person,  shall, 
upon  complying  with  the  provisions  of  this  chapter, 
have  the  sole  liberty  of  printing,  reprinting,  publishing, 
completing,  copying,  executing,  finishing,  and  vending 
the  same;  and,  in  the  case  of  a  dramatic  composition,  of 
publicly  performing  or  representing  it,  or  causing  it  to 
be  performed  or  represented  by  others.  And  authors 
or  their  assigns  shall  have  exclusive  right  to  dramatize 
or  translate  any  of  their  works  for  which  copyright 
shall  have  been  obtained  under  the  laws  of  the  United 
States. 

Printed  Title  Required. — A  printed  copy  of  the  title 
of  the  book,  map,  chart,  dramatic  or  musical  composi- 
tion, engraving,  cut,  print,  photograph,  or  chromo,  or  a 
description  of  the  painting,  drawing,  statue,  statuary,  or 
model  or  design,  for  a  work  of  the  fine  arts,  for  which 
copyright  is  desired,  must  be  delivered  to  the  Librarian 
of  Congress,  or  deposited  in  the  mail,  within  the  United 
States,  prepaid,  addressed  "Librarian  of  Congress,  Wash- 
ington, D.  C*  This  must  be  done  on  or  before  day  of 
publication  in  this  or  any  foreign  country. 

The  printed  title  required  may  be  a  copy  of  the 
title-page  of  such  publications  as  have  title-pages.  In 
other  cases,  the  title  must  be  printed  expressly  for  copy- 
right entry,  with  name  of  claimant  of  copyright.  The 
style  of  type  is  immaterial,  and  the  print  of  a  type- 
writer will  be  accepted.  But  a  separate  title  is  required 
for  each  entry.  The  title  of  a  periodical  must  include 
the  date  and  number;  and  each  number  of  a  periodical 
requires  a  separate  entry  of  copyright.  Blank  forms  of 
application  are  furnished. 


72  BUSINE8S    MAN'S    ENCYCLOPEDIA. 

Fees. — The  legal  fee  for  recording  each  copyright 
claim  is  50  cents,  and  for  a  copy  of  this  record  (or  cer- 
tificate of  copyright)  under  seal  of  the  office  an  addi- 
tional fee  of  50  cents  is  required,  making  $1  or  $1.50,  if 
certificate  is  wanted,  which  will  be  mailed  as  soon  as 
reached  in  the  records.  No  money  is  to  be  placed  in 
any  package  of  books,  music,  or  other  publications.  A 
money  order  or  express  order  avoids  all  risk.  In  the 
case  of  publications  which  are  the  production  of  per- 
sons not  citizens  or  residents  of  the  United  States,  but 
who  are  citi2^ns  or  subjects  of  any  country  with  which 
the  United  States  has  copyright  agreement,  the  fee  for 
recording  title  is  $1,  and  50  cents  additional  for  a  copy 
of  the  record.  Certificates  covering  more  than  one 
entry  in  one  certificate  are  not  issued.  Express  orders, 
money  orders,  and  currency  only  taken  for  fees.  No 
postage  stamps  received. 

Deposit  of  Copies. — No  later  than  the  day  of  publi- 
cation in  this  country  or  abroad,  two  complete  copies  of 
the  best  edition  of  each  book  or  other  article  must  be 
delivered  at  the  ofiice  of  the  Librarian  of  Congress,  or 
deposited  in  the  mail  within  the  United  States,  ad- 
dressed "Librarian  of  Congress,  Washington,  D.  C,"  to 
perfect  the  copyright. 

The  freight  or  postage  must  be  prepaid,  or  the  pub- 
lications inclosed  in  parcels  covered  by  printed  penalty- 
labels,  furnished  by  the  Librarian,  in  which  case  they 
will  come  free  by  mail  (not  express),  without  limit  of 
weight,  according  to  rulings  of  the  Postoflace  Depart- 
ment. Books  must  be  printed  from  type  set  in  the 
United  States  or  plates  made  therefrom;  photographs 
from  negatives  made  in  the  United  States;  chromos 
and  lithographs  from  drawings  on  stone  or  transfers 
therefrom  made  in  the  United  States.  In  the  case  of 
paintings,  drawings,  statuary,  or  models  or  designs  for 
works  of  art,  a  photograph  of  the  article  is  to  be  sent 
in  lieu  of  the  two  copies.  Without  the  deposit  of  copies 
required  the  copyright  is  void,  and  a  penalty  of  $25  is 
incurred.  No  copy  is  required  to  be  deposited  else- 
where. 

The   law   requires    one    copy   of   each   new    edition 


BU8INE88    LAW.  73 

wherein  any  substantial  changes  are  made  to  be  de- 
posited with  the  Librarian  of  Congress. 

Notice  of  Copyright. — No  person  shall  maintain  an 
action  for  the  infringement  of  a  copyright  unless  notice 
is  given  by  inserting  in  every  copy  published,  on  the 
title-page  or  the  page  folowing,  if  it  be  a  book;  or  if  a 
map,  chart,  musical  composition,  print,  cut,  engraving, 
photograph,  painting,  drawing,  chromo,  statue,  statuary, 
or  model  or  design  intended  to  be  perfected  as  a  work 
of  the  fine  arts,  by  inscribing  upon  some  visible  portion 
thereof,  or  on  the  substance  on  which  the  same  is 
mounted,  the  following  words,  viz.:    ''Entered  according 

to  act  of  Congress,   in  the  year  ,   by ,   in  the 

office  of  the  Librarian  of  Congress,  at  Washington,"  or 
at  the  option  of  the  persons  entering  the  copyright, 
the  words:  "Copyright,  19 — ,  by ." 

The  law  imposes  a  penalty  of  $100  upon  any  person 
who  has  not  obtained  copyright  who  shall  insert  the 
notice,  "Entered  according  to  act  of  Congress,"  or 
"Copyright,"  etc.,  or  words  of  the  same  import,  in  or 
upon  any  book  or  other  article,  whether  such  article  be 
subject  to  copyright  or  not. 

Translations. — The  copyright  law  secures  to  authors 
and  their  assigns  the  exclusive  right  to  translate  or  to 
dramatize  any  of  their  works;  no  notice  is  required  to 
enforce  this  right. 

Duration  of  Copyright. — The  original  term  of  copy- 
right runs  for  twenty-eight  years.  Within  six  montns 
before  the  end  of  that  time,  the  author  or  designer, 
or  his  widow  or  children,  may  secure  a  renewal  for 
the  further  term  of  fourteen  years,  making  forty-two 
in  all. 

Renewals. — Application  for  renewal  must  be  accom- 
panied by  printed  title  and  fee;  and  be  explicit  state- 
ment of  ownership,  in  the  case  of  the  author,  or  of  re- 
lationship, in  the  case  of  his  widow  or  children,  and 
must  state  definitely  the  date  and  place  of  entry  of  the 
original  copyright.  Within  two  months  from  date  of 
renewal  the  record  thereof  must  be  advertised  in  an 
American  newspaper  for  four  weeks. 

Time  of  Publication. — The  time  of  publication  is  not 
limited  by  any  law  or  regulation,  but  the  courts  have 


74  BUSINESS    MAN'S    ENCYCLOPEDIA. 

held  that  it  should  take  place  "within  a  reasonable 
time."  Registration  of  title  may  be  secured  for  a  pro- 
jected as  well  as  for  a  completed  work.  But  the  law 
provides  for  no  caveat  or  notice  of  interference — only 
for  actual  entry  of  title. 

Assignments. — Copyrights  are  assignable  by  any  in- 
strument of  writing.  Such  assignment  is  to  be  recorded 
in  the  office  of  the  Librarian  of  Congress  within  sixty 
days  from  execution,  "in  default  of  which  it  shall  be 
void  as  against  any  subsequent  purchaser  or  mortgagee 
for  a  valuable  consideration,  without  notice."  The  fee 
for  this  record  and  certificate  is  $1  and  for  a  certified 
copy  of  any  record  of  assignment  $1.  A  copy  of  the 
record  (or  duplicate  certificate)  of  any  copyright  entry 
will  be  furnished,  under  seal  of  the  office,  at  the  rate 
of  50  cents  each. 

Infringement  of  Copyright. — Infringement  is  a  very 
plain  matter  when  the  copyrighted  work  is  simply  re- 
produced. It  becomes  a  complicated  and  difficult  ques- 
tion when  only  extracts  or  quotations  are  made,  or  when 
resort  is  had  to  a  book  to  make  the  public  acquainted 
with  its  contents  or  to  criticise  its  style  or  the  substance 
of  its  thought.  It  has  long  been  established  that  the 
identity  of  a  literary  work  consists  in  its  ideas  and  its 
language.  The  law  does  not  protect  an  author  against 
the  use  of  his  thoughts  in  a  substantially  different 
form.  Unauthorized  translation  or  dramatization  of  a 
copyrighted  work  is  no  infringement,  nor  is  a  true 
abridgement.  An  abridgement  consists  in  a  condensa- 
tion of  the  author's  language,  and  is  substantially  a 
different  work.  The  rights  of  translation  or  dramatiz- 
ation may  be,  however,  reserved  by  the  author  if  he  so 
desires. 

Abridgment  and  Compilation. — In  a  compilation  there 
is  the  act  of  taking  the  very  words  of  the  author,  or 
with  such  slight  changes  as  to  show  servile  imitation, 
while  abridgment,  as  before  stated,  consists  in  con- 
densation and  consequent  rearrangement.  The  law  at 
most  tolerates  the  condensation  and  does  not  permit  the 
copying  of  the  author's  words  to  such  an  extent  as  to 
do  him  substantial  injury.  Compilation  is  to  some  ex- 
tent   permitted    in    dictionaries,    gazetteers,     encyclo- 


BUSINESS    LAW.  75 

pedias,  guide-books,  etc.,  where  the  main  design  and 
execution  of  the  work  are  novel.  In  works  of  this  class 
the  sources  from  which  information  is  drawn  are  the 
same  and  the  results  must  be  very  similar.  Novelty 
and  improvement  in  them  in  general  consists  in  abridg- 
ment, changes  in  arrangement,  more  modern  informa- 
tion, the  correction  of  errors,  etc. 

Legal  Remedies  for  Violation  of  Copyright. — When 
a  copyright  is  violated  the  regular  remedies  are  an 
action  for  damages  or  an  injunction  from  a  court  of 
equity  preventing  the  continuance  of  the  acts  of  in- 
fringement. As  incidental  to  this  relief,  the  court  may 
direct  an  account  to  be  taken  of  the  profits  realized 
by  the  infringer.  Where  an  infringement  consists  in 
making  use  of  part  of  a  copyrighted  work  in  connection 
with  other  matter,  the  injunction  will  be  so  granted  as 
to  prevent  the  publication  of  that  portion  of  the  in- 
fringer's book  which  is  open  to  objection,  without  ref- 
erence to  the  fact  that  the  order  of  the  court  may  make 
the  book,  thus  shorn  of  a  portion  of  its  contests,  value- 
less. Severe  penalties  and  forfeitures  are  also  im- 
posed by  statute  law  upon  persons  who  knowingly  vio- 
late the  provisions  of  the  copyright  acts. 

LEGAL  HOLIDAYS  IN  THE  VARIOUS 
STATES 

January  1.  New  Year's  Day:  In  all  the  states  (in- 
cluding the  District  of  Columbia,  Arizona,  New  Mexico, 
and  Oklahoma),  except  Massachusetts,  Mississippi,  and 
New  Hampshire. 

January  8.  Anniversary  of  the  Battle  of  New  Orleans: 
In  Louisiana. 

January  19.  Lee's  Birthday:  In  Florida,  Georgia, 
North  Carolina,  South  Carolina,  Virginia,  and  Alabama. 

February  16,  1904.  Mardi-Gras:  In  Alabama  and 
the  parish  of  Orleans,  Louisiana. 

February  12.  Lincoln's  Birthday:  In  Connecticut, 
Delaware,  Illinois,  Minnesota,  New  Jersey,  New  York, 
North  Dakota,  Pennsylvania,  Washington  (state),  and 
Wyoming. 


76  BUSINESS    MAN'S    ENCYCLOPEDIA. 

February  22.  Washington's  Birthday:  In  all  the 
states  (including  the  District  of  Columbia,  Arizona,  and 
Oklahoma),  except  Mississippi,  where  it  is  observed  by 
exercises  in  the  public  schools  only. 

March  2.  Anniversary  of  Texan  Independence:  In 
Texas. 

March  4,  in  the  District  of  Columbia,  when  it  falls 
on  the  day  the  president  is  inaugurated. 

April  1,  1904.  Good  Friday:  In  Alabama,  Delaware, 
Louisiana,  Maryland,  Pennsylvania,  Tennessee. 

April  19.     Patriots'  Day:     In  Massachusetts. 

April  21.  Anniversary  of  the  Battle  of  San  Jacinto: 
In  Texas. 

April  26.  Confederate  Memorial  Day:  In  Alabama, 
Florida,  Georgia  and  Mississippi. 

May  10.  Confederate  Memorial  Day:  In  North 
Carolina  and  South  Carolina. 

May  (Second  Friday).  Confederate  Day:  In  Ten- 
nessee. 

May  20.  Anniversary  of  the  Signing  of  the  Mecklen- 
burg Declaration  of  Independence:     In  North  Carolina. 

May  30.  Decoration  Day:  In  all  the  states  and 
territories  (and  District  of  Columbia)  except  Florida, 
Georgia,  Idaho,  Louisiana,  Mississippi,  North  Carolina, 
South  Carolina,  Texas.  In  Virginia,  known  as  "Con- 
federate Memorial  Day." 

May  (last  Friday)  Pioneer  Day:  In  Montana,  ob- 
served in  public  schools. 

June  (first  Monday),  even  years,  general  state  elec- 
tion in  Oregon. 

June  3.  Jefferson  Davis'  Birthday:  In  Florida, 
Georgia  and  Alabama.  In  Louisiana,  known  as  "Con- 
federate Decoration  Day." 

July  4.  Independence  Day:  In  all  the  states,  Dis- 
trict of  Columbia,  and  territories. 

July  24.    Pioneer's  Day:     In  Utah. 

August  16.    Bennington  Battle  Day:     In  Vermont. 

September  5,  1904.  Labor  Day:  In  all  the  states  and 
territories   (and  District  of  Columbia),  except  Arizona, 


BUSINESS     LAW.  77 

Mississippi,  Nevada  and  N^orth  Dakota.     In  Louisiana, 
observed  in  Orleans  Pai  .h. 

September  9.    Admission  Day:    In  California. 

November  1.    All  Saints*  Day:     In  Louisiana. 

November  —  General  Election  Day:  In  Arizona, 
California,  Colorado,  Delaware,  Idaho,  Indiana,  Iowa, 
Kansas,  Kentucky,  Louisiana,  Maryland,  Minnesota,  Mis- 
souri, Montana,  Nevada,  New  Hampshire,  New  Jersey, 
New  Mexico,  New  York,  North  Dakota,  Ohio,  Okla- 
homa, Oregon  (vote  for  presidential  elections  only) 
Pennsylvania,  Rhode  Island,  South  Carolina,  South  Da 
kota,  Tennessee,  Texas,  West  Virginia,  Washington; 
Wisconsin  and  Wyoming,  in  the  years  when  elections 
are  held  therein.  In  1904  in  states  holding  such  elec 
tions  the  date  was  November  8. 

November  —  1905.  Thanksgiving  Day  (usually  the 
fourth  Thursday  in  November) :  Is  observed  in  all  the 
states,  and  in  the  District  of  Columbia,  Arizona,  New 
Mexico  and  Oklahoma,  though  in  some  states  it  is  not 
a  statutory  holiday. 

December  25.  Christmas  Day:  In  all  the  states,  and 
in  the  District  of  Columbia,  Arizona,  New  Mexico  and 
Oklahoma. 

Sundays  and  fast  days  are  legal  holidays  in  all  the 
states  which  designate  them  as  such. 

There  are  no  statutory  holidays  in  Mississippi,  but 
by  common  consent  the  Fourth  of  July,  Thanksgiving 
and  Christmas  are  observed  as  holidays.  In  Kansas 
Decoration  Day,  Labor  Day  and  Washington's  Birthday 
are  the  only  legal  holidays  by  legislative  enactment; 
other  legal  holidays  are  so  only  by  common  consent.  In 
New  Mexico,  Washington's  Birthday,  Decoration  Day, 
Labor  Day,  Flag  Day  (June  14),  and  Arbor  Day  are 
holidays  when  so  designated  by  the  governor. 

Arbor  Day  is  a  legal  holiday  in  Arizona,  Maine,  Min- 
nesota, New  Mexico,  Wisconsin  and  Wyoming,  the  day 
being  set  by  the  governor;  in  Texas,  February  22;  Ne- 
braska, April  22;  Utah,  April  15;  Rhode  Island,  May  11; 
Montana,  second  Tuesday  in  May;  Florida,  first  Friday 
in  February;   Georgia,  first  Friday  in  December;   Colo- 


78  BUSINESS    MAN'S    ENCYCLOPEDIA. 

rado  (school  holiday  only),  third  Friday  in  April;  in 
Oklahoma,  the  Friday  following  the  second  Monday  in 
March. 

Every  Saturday  after  12  o'clock  noon  is  a  legal  holi- 
day in  New  York,  New  Jersey,  Pennsylvania,  Maryland, 
Tennessee,  Virginia,  the  District  of  Columbia,  and  the 
city  of  New  Orleans,  and  in  Newcastle  county,  Del., 
except  in  St.  George's  Hundred;  in  Louisiana  and  Mis- 
souri in  cities  of  100,000  or  more  inhabitants;  in  Ohio 
in  cities  of  50,000  or  more  inhabitants;  and  June  1  to 
August  31  in  Denver,   Col. 

There  is  no  national  holiday,  not  even  the  Fourth  of 
July.  Congress  has  at  various  times  appointed  special 
holidays.  In  the  second  session  of  the  Fifty-third  con- 
gress it  passed  an  act  making  Labor  Day  a  public  holi- 
day in  the  District  of  Columbia,  and  it  has  recognized 
the  existence  of  certain  days  as  holidays  for  commer- 
cial purposes,  but,  with  the  exception  named,  there  is 
no  general  statute  on  the  subject.  The  proclamation  of 
the  president  designating  a  day  of  Thanksgiving  only 
makes  it  a  legal  holiday  in  the  District  of  Columbia 
and  the  territories,  and  in  those  states  which  provide 
by  law  for  it. 

LABOR  LEGISLATION 

Anti-Boycotting  and  Anti-Blacklisting  Laws. — The 
states  having  laws  prohibiting  boycotting  in  terms  are 
Illinois  and  Indiana. 

The  states  having  laws  prohibiting  blacklisting  in 
terms  are  Colorado,  Connecticut,  Florida,  Illinois,  In- 
diana, Iowa,  Kansas,  Minnesota,  Missouri,  Montana,  Ne- 
vada, North  Dakota,  Oklahoma,  Texas,  Utah,  Virginia, 
Washington  and  Wisconsin. 

The  following  states  have  laws  which  may  be  fairly 
construed  as  prohibiting  boycotting:  Alabama,  Connecti- 
cut, Florida,  Georgia,  Maine,  Massachusetts,  Michigan, 
Minnesota,  Mississippi,  Missouri,  New  Hampshire,  New 
York,  North  Dakota,  Oklahoma,  Oregon,  South  Dakota, 
Texas,  Utah,  Vermont  and  Wisconsin. 

The  following  states  have  laws  which  may  be  fairly 
construed  as  prohibiting  blacklisting:     Georgia,  Michi- 


BUSINESS    LAW.  79 

gan.  New  Hampshire,  New  York,    Oklahoma,    Oregon, 
Rhode  Island  and   South  Dakota. 

In  the  following  states  it  is  unlawful  for  any  em- 
ployer to  exact  an  agreement,  either  written  or  verbal, 
from  an  employe  not  to  join  or  become  a  member  of 
any  labor  organization,  as  a  condition  of  employment: 
California,  Colorado,  Connecticut,  Idaho,  Indiana,  Kan- 
sas, Massachusetts,  Minnesota,  Missouri,  New  Jersey, 
New  York,  Ohio,  Pennsylvania,  Porto  Rico  and  Wis- 
consin. 

EIGHT-HOUR  LAWS 

Arkansas. — Eight  hours  of  labor  constitute  a  day's 
work  on  public  roads,  highways  and  bridges. 

California. — Eight  hours  of  labor  constitutes  a  day's 
work,  unless  it  is  otherwise  expressly  stipulated  by 
the  parties  to  a  contract.  The  time  of  service  of  all 
laborers,  workmen,  and  mechanics  employed  upon  any 
public  works  of,  or  work  done  for,  the  state,  or  for  any 
political  sub-division  thereof,  whether  the  work  is  to  be 
done  by  contract  or  otherwise,  is  limited  and  restricted 
to  eight  hours  in  any  one  calendar  day,  and  a  stipula- 
tion that  no  workman,  laborer,  or  mechanic  in  the  em- 
ploy of  the  contractor  or  sub-contractor  shall  be  re- 
quired or  permitted  to  work  more  than  eight  hours  in 
any  one  calendar  day,  except  in  cases  of  extraordinary 
emergency,  shall  be  contained  in  every  contract  to 
which  the  state  or  any  political  sub-division  thereof  is 
a  party. 

Colorado. — Eight  hours  constitutes  a  day's  work  for 
all  workingmen  employed  by  the  state,  or  any  county, 
township,  school  district,  municipality,  or  incorporated 
town,  and  for  workingmen  in  all  underground  mines  or 
workings  and  in  smelting  and  refining  works. 

Connecticut. — Eight  hours  of  labor  constitute  a  law- 
ful day's  work  unless  otherwise  agreed. 

District  of  Columhia. — Eight  hours  constitute  a  day's 
work  for  all  laborers  or  mechanics  employed  by  or  on 
behalf  of  the  District  of  Columbia. 

Idaho. — Eight  hours'  actual  work  constitute  a  lawful 
day's  work  on  all  state,  county  and  municipal  works. 

Illinois. — Eight  hours  are  a  legal  day's  work  in  all 
mechanical  employments,  except  on  farms,  and  when 


80  BUSINESS    MAN'S    ENCYCLOPEDIA, 

otherwise  agreed;  does  not  apply  to  service  by  the  day, 
week,  or  month,  or  prevent  contracts  for  longer  hours. 
Eight  hours  constitute  a  day's  labor  for  persons  as- 
sessed to  work  on  public  highways. 

Indiana. — Eight  hours  of  labor  constitute  a  legal 
day's  work  for  all  classes  of  mechanics,  workingmen 
and  laborers,  excepting  those  engaged  in  agricultural 
and  domestic  labor.  Overwork  by  agreement  and  for 
extra  compensation  is  permitted.  The  employment  of 
persons  under  fourteen  years  of  age  for  more  than 
eight  hours  per  day  is  absolutely  prohibited. 

Iowa. — Eight  hours  constitute  a  day's  labor  on  public 
roads. 

Kansas. — Eight  hours  constitute  a  day's  work  for  all 
laborers,  mechanics  or  other  persons  employed  by  or  on 
behalf  of  the  state  or  any  county,  city,  township,  or 
other  municipality. 

Maryland. — No  mechanic  or  laborer  employed  by  or 
on  behalf  of  the  city  of  Baltimore  shal  be  required  to 
work  more  than  eight  hours  as  a  day's  labor. 

Massachusetts. — Eight  hours  shall  constitute  a  day's 
work  for  all  laborers,  workmen,  and  mechanics  em- 
ployed by  or  on  behalf  of  any  city  or  town  in  the 
commonwealth  upon  acceptance  of  the  statute  by  a  ma- 
jority of  voters  present  and  voting  upon  the  same  at  any 
general  election. 

Minnesota. — Eight  hours  constitute  a  day's  labor 
for  all  laborers,  workmen  and  mechanics  employed 
by  or  on  behalf  of  the  state,  whether  the  work  is  done 
by  contract  or  otherwise. 

Missouri. — Eight  hours  constitute  a  legal  day's  work. 
The  law  does  not  prevent  an  agreement  to  work  for  a 
longer  or  a  shorter  time  and  does  not  apply  to  la- 
borers and  farm  hands  in  the  service  of  farmers  or 
others  engaged  in  agriculture.  It  is  unlawful  for  em- 
ployers to  work  their  employes  longer  than  eight  hours 
per  day  in  mines. 

Montana. — Eight  hours  constitute  a  legal  day's  work 
for  persons  engaged  to  operate  or  handle  any  first-mo- 
tion or  direct-acting  hoisting  engine,  or  any  geared  or  in- 
direct-acting hoisting  engine  at  any  mine  employing  fif- 
teen or  more  men  underground  when  the  duties  of  fire- 
man are  performed  by  the  person  so  engaged;  also  for 


BUSINESS     LAW.  81 

any  stationary  engineer  operating  a  stationary  engine 
developing  fifty  or  more  horse-power  when  such  engi- 
neer has  charge  or  control  of  a  boiler  or  boilers  in  addi- 
tion to  his  other  duties.  The  law  applies  only  to  such 
steam  plants  as  are  in  continuous  operation  or  are 
operated  sixteen  or  more  hours  in  each  twenty-four 
hours,  and  does  not  apply  to  persons  running  any  engine 
more  than  eight  hours  in  each  twenty-four  for  the  pur- 
pose of  relieving  another  employe  in  case  of  sickness  or 
other  unforeseen  cause.  Eight  hours  constitute  a  day's 
labor  upon  roads  and  highways. 

Nebraska — Eight  hours  constitute  a  day's  work  on 
public  roads. 

New  Jersey. — Eight  hours  constitute  a  day's  labor 
on  any  day  whereon  any  general  or  municipal  election 
shall  be  held. 

New  Meooico. — Eight  hours  are  required  as  a  day's 
labor  on  public  roads  and  highways. 

New  York,. — Eight  hours  constitute  a  day's  work  for 
all  classes  of  employes,  except  in  farm  or  domestic 
labor.  Overwork  for  extra  pay  is  permitted,  except 
upon  work  by  or  for  the  state  or  a  municipal  corpora- 
tion, or  by  contractors  or  sub-contractors  therewith. 
The  law  applies  to  those  employed  by  the  state  or  muni- 
cipality, or  by  persons  contracting  for  state  work,  and 
each  contract  to  which  the  state  or  a  municipal  corpora- 
tion is  a  party  shall  contain  a  stipulation  that  no  work- 
man, laborer,  or  mechanic  in  the  employ  of  the  con- 
tractor, sub-contractor,  etc.,  shall  be  permitted  or  re- 
quired to  work  more  than  eight  hours  in  any  one  calen- 
dar day,  except  in  cases  of  extraordinary  emergency. 

Ohio. — Eight  hours  shall  constitute  a  day's  work  in 
all  engagements  to  labor  in  any  mechanical,  manufac- 
turing, or  mining  business,  unless  otherwise  expressly 
stipulated  in  the  contract. 

Oklahoma. — Eight  hours  constitute  a  day's  labor  on 
public  highways. 

Oregon. — Eight  hours  constitute  a  day's  labor  on 
public  roads. 

Pennsylvania. — Eight  hours  of  labor  shall  be  deemed 
and  held  to  be  a  legal  day's  work  in  all  cases  of  labor 
and  service  by  the  day  where  there  is  no  agreement 


82  BUSINESS    MAN'S    ENCYCLOPEDIA, 

or  contract  to  the  contrary.  This  does  not  apply  to 
farm  or  agricultural  labor  or  service  by  the  year,  month 
or  week. 

Eight  hours  out  of  the  twenty-four  shall  make  and 
constitute  a  day's  labor  for  all  mechanics,  workmen, 
and  laborers  in  the  employ  of  the  state,  or  of  any 
municipal  corporation  therein,  or  otherwise  engaged  on 
public  works;  this  shall  be  deemed  to  apply  to  me- 
chanics, workingmen,  or  laborers  in  the  employ  of  per- 
sons contracting  with  the  state  or  any  municipal  cor- 
poration therein,  for  the  performance  of  public  work. 

Porto  Rico. — No  laborer  may  be  compelled  to  work 
more  than  eight  hours  per  day  on  public  works. 

Tennessee. — Eight  hours  shall  be  a  day's  work  upon 
the  highways. 

Texas. — Eight  hours  constitute  a  day's  work  on  pub- 
lic highways. 

Utah. — Eight  hours  constitute  a  day's  work  upon  all 
public  works  and  in  all  underground  mines  or  workings, 
smelters  and  all  other  institutions  for  the  reduction  or 
refining  of  ores. 

Washington. — Eight  hours  in  any  calendar  day  shall 
constitute  a  day's  work  on  any  work  done  for  the  state, 
county  or  municipality.  In  cases  of  extraordinary 
emergency  overtime  may  be  worked  for  extra  pay. 

West  Virginia. — Eight  hours  shall  constitute  a  day's 
work  for  all  laborers,  workmen  and  mechanics  who 
may  be  employed  by  or  on  behalf  of  the  state. 

Wisconsin. — In  all  engagements  to  labor  in  any 
manufacturing  or  mechanical  business,  where  there  is 
no  express  contract  to  the  contrary,  a  day's  work  shall 
consist  of  eight  hours;  but  the  law  does  not  apply  to 
contracts  for  labor  by  the  week,  month  or  year.  In  all 
manufactories,  workshops  or  other  places  used  for  me- 
chanical or  manufacturing  purposes,  children  under 
eighteen  years  of  age  and  women  may  not  be  com- 
pelled to  work  over  eight  hours  a  day.  Eight  hours 
constitute  a  day's  labor  on  public  highways. 

Wyoming. — Eight  hours'  actual  work  constitute  a 
legal  day's  work  in  all  mines,  state  and  municipal  works. 

United  States. — Eight  hours  shall  constitute  a  day's 
work  for  all  laborers,  workmen,  and  mechanics  who 
may  be  employed  by  or  on  behalf  of  the  United  States. 


BUSINESS    LAW,  83 

PASSPORT  REGULATIONS 

The  rules  governing  the  granting  and  issuing  of  pass- 
ports in  the  United  States  are  as  follows: 

By  Whom  Issued. — No  one  but  the  secretary  of  state 
may  grant  and  issue  passports  in  the  United  States. — 
Revised  Statutes,  sees.  4075,  4078. 

A  person  entitled  to  receive  a  passport  if  temporarily 
abroad  should  apply  to  the  diplomatic  representative  of 
the  United  States  in  the  country  where  he  happens  to 
be;  or,  in  the  absence  of  a  diplomatic  representative,  to 
the  consul-general  of  the  United  States;  or,  in  the  ab- 
sence of  both,  to  the  consul  of  the  United  States.  The 
necessary  statement  may  be  made  before  the  nearest 
consular  officer  of  the  United  States. 

Application  by  a  person  in  one  of  the  insular  posses- 
sions of  the  United  States  should  be  made  to  the  chief 
executive  of  such  possession. 

To  Whom  Issued. — The  law  forbids  the  granting  of 
a  passport  to  any  person  who  is  not  a  citizen  of  the 
United  States. — Revised  Statutes,  sec.  4076. 

A  person  who  has  only  made  the  declaration  of  in- 
tention to  become  a  citizen  of  the  United  States  cannot 
receive  a  passport. 

Applications. — A  person  who  is  entitled  to  receive 
a  passport  must  make  a  written  application,  in  the 
form  of  an  affidavit,  to  the  secretary  of  state. 

The  affidavit  must  be  attested  by  an  officer  author- 
ized to  administer  oaths,  and  if  he  has  an  official  seal  it 
must  be  affixed.  If  he  has  no  seal,  his  official  character 
must  be  authenticated  by  certificate  of  the  proper  legal 
officer. 

If  the  applicant  signs  by  mark,  two  attesting  wit- 
nesses to  his  signature  are  required. 

The  applicant  is  required  to  state  the  date  and  place 
of  his  birth,  his  occupation,  and  the  place  of  his  per- 
manent residence,  and  to  declare  that  he  goes  abroad 
for  temporary  sojourn  and  intends  to  return  to  the 
United  States  with  the  purpose  of  residing  and  per- 
forming the  duties  of  citizenship  therein. 

The  applicant  must  take  the  oath  of  allegiance  to 
the  government  of  the  United  States. 


84  BU8INE88    MAN'S    ENCYCLOPEDIA, 

The  application  must  be  accompanied  by  a  descrip- 
tion of  the  person  applying,  and  should  state  the  fol- 
lowing particulars,  viz.:  Age,  years;   stature,  

feet  inches    (English    measure) ;    forehead,  ; 

eyes,  ;  nose,  ;   mouth,  ;   chin,  ;   hair, 

;  complexion,  ;  face,  . 

The  application  must  be  accompanied  by  a  certificate 
from  at  least  one  credible  witness  that  the  applicanc  is 
the  person  he  represents  himself  to  be,  and  that  the 
facts  stated  in  the  afladavit  are  true  to  the  best  of  the 
witness's  knowledge  and  belief. 

Native  Citizens. — An  application  containing  the  in- 
formation indicated  by  rule  3  will  be  sufficient  evidence 
in  the  case  of  native  citizens. 

A  Person  Born  Abroad  Whose  Father  Was  a  Native 
Citizen  of  tiie  United  States. — In  addition  to  the  state- 
ments required  by  rule  3,  his  application  must  show  that 
his  father  was  born  in  the  United  States,  has  resided 
therein,  and  was  a  citizen  at  the  time  of  the  applicant's 
birth.  The  department  may  require  that  this  affidavit 
be  supported  by  that  of  one  other  citizen  acquainted 
with  the  facts. 

Naturalized  Citizens. — In  addition  to  the  statements 
required  by  rule  3,  a  naturalized  citizen  must  transmit 
his  certificate  of  naturalization,  or  a  duly  certified  copy 
of  the  court  record  thereof,  with  his  application.  It  will 
be  returned  to  him  after  inspection.  He  must  state 
in  his  affidavit  when  and  from  what  port  he  emigrated 
to  this  country,  what  ship  he  sailed  in,  where  he  has 
lived  since  his  arrival  in  the  United  States,  when  and 
before  what  court  he  was  naturalized,  and  that  he  is 
the  identical  person  described  in  the  certificate  of  natur- 
alization. The  signature  to  the  application  should  con- 
form in  orthography  to  the  applicant's  name  as  written 
in  the  naturalization  paper,  which  the  department  fol- 
lows. 

Woman's  Application. — If  she  is  unmarried,  in  addi- 
tion to  the  statements  required  by  rule  3,  she  should 
state  that  she  has  never  been  married.  If  she  is  the 
wife  of  a  native  citizen  of  the  United  States  the  fact 
should  be  made  to  appear  in  her  application.  If  she  is 
the  wife  or  widow  of  a  naturalized  citizen,  in  addition 


BUSINESS    LAW.  85 

to  the  statements  required  by  rule  3,  she  must  transmit 
for  inspection  her  husband's  certificate  of  naturaliza- 
tion, must  state  that  she  is  the  wife  (or  widow)  of  the 
person  described  therein,  and  must  set  forth  the  facts 
of  his  emigration,  naturalization,  and  residence,  as  re- 
quired in  the  rule  governing  the  application  of  a  natur- 
alized citizen. 

The  Child  of  a  Naturalized  Citizen  Claiming  Citi- 
zenship Through  the  Naturalization  of  the  Parent. — In, 
addition  to  the  statements  required  by  rule  3,  the  appli- 
cant must  state  that  he  or  she  is  the  son  or  daughter, 
as  the  case  may  be,  of  the  person  described  in  the 
certificate  of  naturalization,  which  must  be  submitted 
for  inspection,  and  must  set  forth  the  facts  of  emigra- 
tion, naturalization,  and  residence,  as  required  in  the 
rule  governing  the  application  of  a  naturalized  citizen. 

A  Resident  of  an  Insular  Possession  of  the  United 
States  Who  Owes  Allegiance  to  the  United  States. — In 
addition  to  the  statements  required  by  rule  3,  he  must 
state  that  he  owes  allegiance  to  the  United  States  and 
that  he  does  not  acknowledge  allegiance  to  any  other 
government;  and  must  submit  an  affidavit  from  at  least 
two  credible  witnesses  having  good  means  of  knowledge 
In  substantiation  of  his  statements  of  birth,  residence, 
and  loyalty. 

Expiration  of  Passport. — A  passport  expires  two 
years  from  the  date  of  its  issuance.  A  new  one  will 
be  issued  upon  a  new  application,  and  if  the  applicant 
be  a  naturalized  citizen,  the  old  passport  will  be  ac- 
cepted in  lieu  of  a  certificate  of  naturalization,  if  the 
application  upon  which  it  was  issued  is  found  to  contain 
sufficient  information  as  to  the  naturalization  of  the 
applicant. 

Wife,  Minor  Children  and  Servants. — When  the  appli- 
cant is  accompanied  by  his  wife,  minor  children,  or 
servant  who  would  be  entitled  to  receive  a  passport,  it 
will  be  sufl[icient  to  state  the  fact,  giving  the  respective 
ages  of  the  children  and  the  allegiance  of  the  servant, 
when  one  passport  will  suffice  for  all.  For  any  other 
person  in  the  party  a  separate  passport  will  be  re- 
quired.    A  woman's  passport  may  include  her  minor 


86  BUSINESS    MAN'S    ENCYCLOPEDIA. 

children  and  servant  under  the  above-named  conditions. 

Professional  Titles. — They  will  not  be  inserted  in 
passports. 

Fee. — By  act  of  congress  approved  March  23,  1888, 
a  fee  of  one  dollar  is  required  to  be  collected  for 
every  citizen's  passport.  That  amount  in  currency  or 
postal  money  order  should  accompany  each  application 
made  by  a  citizen  of  the  United  States.  Orders  should 
be  made  payable  to  the  disbursing  clerk  of  the  de- 
partment of  state.  Drafts  or  checks  will  not  be  ac- 
cepted. 

Visas  of  Passports. — They  will  not  be  procured  by 
the  department  of  state  from  the  representatives  of 
foreign  governments. 

Blank  Forms  of  Application. — They  will  be  furnished 
by  the  department  to  persons  who  desire  to  apply  for 
passports,  but  are  not  furnished,  except  as  samples,  to 
those  who  make  a  business  of  procuring  passports. 

Address. — Communications  should  be  addressed  to 
the  department  of  state,  passport  bureau,  and  each  com- 
munication should  give  the  postoffice  address  of  the 
person  to  whom  the  answer  is  to  be  directed. 

Rejection  of  Application. — The  secretary  of  state 
may  refuse  to  issue  a  passport  to  any  one  who,  he  has 
reason  to  believe,  desires  it  for  an  unlawful  or  im- 
proper purpose,  or  who  is  unable  or  unwilling  to  com- 
ply with  the  rules. 

NATURALIZATION  LAWS  OF  THE 
UNITED  STATES 

The  conditions  under  and  the  manner  in  which  an 
alien  may  be  admitted  to  become  a  citizen  of  the  United 
States  are  prescribed  by  sections  2165-74  of  the  Revised 
Statutes  of  the  United  States. 

Declaration  of  Intentions. — The  alien  must  declare 
upon  oath  before  a  circuit  or  district  court  of  the 
United  States  or  a  district  or  supreme  court  of  the 
territories,  or  a  court  of  record  of  any  of  the  states 
having  common  law  jurisdiction  and  a  seal  and  clerk, 
two  years  at  least  prior  to  his  admission,  that  it  is, 
bona   fide,    his   intention   to   become   a   citizen   of  the 


BUSINESS    LAW,  87 

United  States,  and  to  renounce  forever  all  allegiance 
and  fidelity  to  any  foreign  prince  or  state,  and  particu- 
larly to  the  one  of  which  he  may  be  at  the  time  a  citi- 
zen or  subject. 

Oath  on  Application  for  Admission. — He  must  at  the 
time  of  his  application  to  be  admitted  declare  on  oath, 
before  some  one  of  the  courts  above  specified,  "that  he 
will  support  the  Constitution  of  the  United  States,  and 
that  he  absolutely  and  entirely  renounces  and  abjures 
all  allegiance  and  fidelity  to  every  foreign  prince,  poten- 
tate, state  or  sovereignty,  and  particularly,  by  name, 
to  the  prince,  potentate,  state,  or  sovereignty  of  which 
he  was  before  a  citizen  or  subject,**  which  proceedings 
must  be  recorded  by  the  clerk  of  the  court. 

Conditions  for  Citlzensiiip. — If  it  shall  appear  to  the 
satisfaction  of  the  court  to  which  the  alien  has  ap- 
plied that  he  has  made  a  declaration  to  become  a  citi- 
zen two  years  before  applying  for  final  papers,  and 
has  resided  continuously  within  the  United  States  for 
at  least  five  years,  and  within  the  state  or  territory 
where  such  court  is  at  the  time  held  one  year  at  least; 
and  that  during  that  time  "he  has  behaved  as  a  man 
of  good  moral  character,  attached  to  the  principles  of 
the  Constitution  of  the  United  States,  and  well  disposed 
to  the  good  order  and  happiness  of  the  same,'*  he  will 
be  admitted  to  citizenship.  If  the  applicant  has  borne 
any  hereditary  title  or  order  of  nobility  he  must  make 
an  express  renunciation  of  the  same  at  the  time  of 
his  application. 

Soldiers. — Any  alien  of  the  age  of  twenty-one  years 
and  upward  who  has  been  in  the  armies  of  the  United 
States,  and  has  been  honorably  discharged  therefrom, 
may  become  a  citizen  on  his  petition,  without  any 
previous  declaration  of  intention,  provided  that  he  has 
resided  in  the  United  States  at  least  one  year  previous 
to  his  application,  and  is  of  good  moral  character. 
(It  is  judicially  decided  that  residence  of  one  year  in  a 
particular  state  is  not  requisite.) 

Minors. — Any  alien  under  the  age  of  twenty-one  years 
who  has  resided  in  the  United  States  three  years  next 
preceding  his  arriving  at  that  age,  and  who  has  con- 
tinued to  reside  therein  to  the  time  he  may  make  appli- 


88  BUSINESS    MAN'S    ENCYCLOPEDIA. 

cation  to  be  admitted  a  citizen  thereof,  may,  after  he 
arrives  at  the  age  of  twenty-one  years,  and  after  he 
has  resided  five  years  within  the  United  States,  includ- 
ing the  three  years  of  his  minority,  be  admitted  a  citi- 
zen; but  he  must  make  a  declaration  on  oath  and  prove 
to  the  satisfaction  of  the  court  that  for  two  years  next 
preceding  it  has  been  his  bona  fide  intention  to  become 
a  citizen. 

Children  of  Naturalized  Citizens. — The  children  of 
persons  who  have  been  duly  naturalized,  being  under  the 
age  of  twenty-one  years  at  the  time  of  the  naturalization 
of  their  parents,  shall,  if  dwelling  in  the  United  States, 
be  considered  as  citizens  thereof. 

Citizens'  Cliildren  Who  Are  Born  Abroad. — The 
children  of  persons  who  now  are  or  have  been  citizens 
of  the  United  States  are,  though  born  out  of  the  limits 
and  jurisdiction  of  the  United  States,  considered  as  citi- 
zens thereof. 

Chinese. — The  naturalization  of  Chinamen  is  ex- 
pressly prohibited  by  section  14,  chapter  126,  laws 
of  1882. 

Protection  Abroad  to  Naturalized  Citizens. — Section 
2,000  of  the  Revised  Statutes  of  the  United  States  de- 
clares that  "all  naturalized  citizens  of  the  United  States 
while  in  foreign  countries  are  entitled  to  and  shall  re- 
ceive from  this  government  the  same  protection  of  per- 
sons and  property  which  is  accorded  to  native-born 
citizens." 

The  Right  of  Suffrage. — The  right  to  vote  comes  from 
the  state,  and  is  a  state  gift.  Naturalization  is  a  Fed- 
eral right  and  is  a  gift  of  the  Union,  not  of  any  one 
state.  In  nearly  one-half  of  the  Union  aliens  (who 
have  declared  intentions)  vote  and  have  the  right  to 
vote  equally  with  naturalized  or  native-bom  citizens. 
In  the  other  half  only  actual  citizens  may  vote.  (See 
Table  of  Qualifications  for  Voting  in  each  State,  on  an- 
other page.)  The  Federal  naturalization  laws  apply 
to  the  whole  Union  alike,  and  provide  that  no  alien 
may  be  naturalized  until  after  five  years'  residence. 
Even  after  five  years'  residence  and  due  naturalization 
lie  is  not  entitled  to  vote  unless  the  laws  of  the  state 
confer  the  privilege  upon  him,  and  he  may  vote  in  sev- 


BUSINESS     LAW.  89 

eral  states  six  months  after  landing,  if  lie  has  declared 
his  intention,  under  United  States  law,  to  become  a 
citizen. 

Inhabitants  of  the  New  Insular  Possessions. — The  in- 
habitants of  Hawaii  were  declared  to  be  citizens  of 
the  United  States  under  the  act  of  1900  creating  Ha- 
waii a  territory.  Under  the  United  States  supreme 
court  decision  in  the  insular  cases,  in  May,  1901,  the  in- 
habitants of  the  Philippines  and  Porto  Rico  are  entitled 
to  full  protection  under  the  Constitution,  but  not  to  the 
privileges  of  United  States  citizenship  until  congress  so 
decrees,  by  admitting  the  countries  as  states  or  organ- 
izing them  as  territories. 

DOMESTIC  RATES  OF  POSTAGE 

All  mailable  matter  for  transmission  by  the  United 
States  mails  within  the  United  States  is  divided  into 
four  classes,  under  the  following  regulations.  (Domes- 
tic rates  apply  to  Canada,  Mexico,  Cuba,  Tutuila,  Porto 
Rico,  Guam,  Hawaii,  the  Philippines,  and  certain  places 
in  China  served  through  the  United  States  postal  agency 
at  Shanghai.) 

Flrst-Ciass  Matter. — This  class  includes  letters,  post- 
al cards,  "post  cards,"  and  anything  sealed  or  other- 
wise closed  against  inspection,  or  anything  containing 
writing  not  allowed  as  an  accompaniment  to  printed 
matter  under  class  three. 

Rates  of  letter  postage  to  any  part  of  the  United 
States,  two  cents  per  ounce  or  fraction  thereof. 

Rates  on  local  or  drop  letters  at  free  delivery  of- 
fices, two  cents  per  ounce  or  fraction  thereof. 

Rates  on  postal  cards,  one  cent  (double  or  "reply" 
cards,  two  cents).  Nothing  must  be  added  or  attached 
to  a  postal  card,  except  that  a  printed  address  slip"  not 
larger  than  2  inches  by  %  of  an  inch  may  be  pasted 
on  the  address  or  message  side.  The  addition  of  any- 
thing else  subjects  the  card  to  letter  postage.  A  card 
containing  any  threat,  offensive  dun,  or  any  scurrilous 
or  indecent  communication  will  not  be  forwarded. 
Words  on  a  postal  card  indicating  the  occupation  of 
the  addressee,  used  to  better  identify  him,  are  regarded 


90  BUSINESS    MAN'S    ENCYCLOPEDIA, 

as  a  part  of  the  address;  anything  more — as  the  repeti- 
tion of  the  words  on  a  postal  card,  etc.,  business  or  the 
several  capacities  in  which  the  addressee  serves,  the 
various  kinds  of  goods  dealt  in,  and  similar  attempts 
at  advertising — on  the  address  side  of  the  postal  card 
is  not  regarded  as  a  "proper  description  of  the  per- 
son," and  will  subject  the  postal  card  to  the  letter  rate. 
Cards  that  have  been  spoiled  in  printing  or  otherwise 
will  be  redeemed  from  the  original  purchasers  at  75 
per  cent  of  their  face  value,  if  unmutilated. 

"Private  Mailing  Cards,"  "Post  Cards,"  bearing  writ- 
ten messages  may  be  transmitted  in  the  domestic  mails 
at  the  rate  of  a  cent  apiece,  stamps  to  be  affixed  by 
the  sender;  such  cards  to  be  sent  openly  in  the  mails. 

Rates  on  specially  delivered  letters,  ten  cents  on 
each  letter  in  addition  to  the  regular  postage.  This 
entitles  the  letter  to  immediate  delivery  by  special  mes- 
senger. Special  delivery  stamps  are  sold  at  postoffices, 
and  must  be  affixed  to  such  letters.  An  ordinary  ten- 
cent  stamp  affixed  to  a  letter  will  not  entitle  it  to  spe- 
cial delivery.  The  delivery,  at  carrier  offices,  extends 
to  the  limits  of  the  carrier  routes.  At  non-carrier  of- 
fices it  extends  to  one  mile  from  the  postoffice.  Post- 
masters are  not  obliged  to  deliver  beyond  these  limits, 
and  letters  addressed  to  places  beyond  must  await  de- 
livery in  the  usual  way,  notwithstanding  the  special  de- 
livery stamp. 

Prepayment  by  stamps  invariably  required.  Postage 
on  all  letters  should  be  fully  prepaid,  but  if  prepaid 
one  full  rate  and  no  more  they  will  be  forwarded,  and 
the  amount  of  deficient  postage  collected  on  delivery; 
if  wholy  unpaid,  or  prepaid  with  less  than  one  full  rate 
and  deposited  at  a  postoffice,  the  addressee  will  be  noti- 
fied to  remit  postage;  and  if  he  fails  to  do  so,  they 
will  be  sent  to  the  dead  letter  office;  but  they  will  be 
returned  to  the  sender  if  he  is  located  at  the  place  of 
mailing,  and  if  his  address  be  printed  or  written  upon 
them. 

Letter  rates  are  charged  on  all  productions  by  the 
typewriter  or  manifold  process,  and  on  all  printed  imita- 
tions of  typewriting  or  manuscript,  unless  such  repro- 
ductions  are   presented   at  postoffice  windows   in   the 


BUSINESS    LAW,  91 

minimum  number  of  twenty  identical  copies  separately 
addressed. 

Letters  (but  no  other  class  of  mail  matter)  will  be 
returned  to  the  sender  free,  if  a  request  to  that  effect 
is  printed  or  written  on  the  envelope.  There  is  no 
limit  of  wight  for  first-class  matter  fully  prepaid. 

Prepaid  letters  will  be  reforwarded  from  one  post- 
office  to  another  upon  the  written  request  of  the  per- 
son addressed,  without  additional  charge  for  postage. 
The  direction  on  forwarded  letters  may  be  changed  as 
many  times  as  may  be  necessary  to  reach  the  person  ad- 
dressed. 

Second-Class  Matter. — This  class  includes  all  news- 
papers and  periodicals  exclusively  in  print  that  have 
been  "Entered  as  second-class  matter"  and  are  regu- 
larly issued  at  stated  intervals  as  frequently  as  four 
times  a  year,  from  a  known  office  of  publication  or 
news  agency,  to  actual  subscribers  or  news  agents,  and 
transient  newspapers  and  publications  of  this  class 
mailed  by  persons  other  than  publishers.  Publications 
having  the  characteristics  of  books  and  such  as  are  not 
subscribed  for  on  account  of  their  literary  merits,  but 
because  of  other  inducements,  are  not  eligible  to  sec- 
ond-class privileges.  Also  periodical  publications  of 
benevolent  and  fraternal  societies,  organized  under  the 
lodge  system  and  having  a  membership  of  a  thousand 
persons,  and  of  the  bulletins  and  proceedings  of  strictly 
professional,  literary,  historical,  and  scientific  associa- 
tions and  institutions,  trade  unions,  etc.,  provided  only 
that  these  be  published  at  stated  intervals  not  less  than 
four  times  a  year,  and  that  they  be  printed  on  and  be 
bound  in  paper.  Publishers  who  wish  to  avail  them- 
selves of  the  privileges  of  the  act  are  required  to 
make  formal  application  to  the  department  through  the 
postmaster  at  the  place  of  publication,  producing  satis- 
factory evidence  that  the  organizations  represented 
come  within  the  purview  of  the  law,  and  that  the  ob- 
ject of  the  publications  is  to  further  the  objects  and  pur- 
poses of  the  organizations. 

Rates  of  postage  to  publishers,  one  cent  a  pound  or 
fractional  part  thereof,  prepaid  in  currency.  Publica- 
tions designed  primarily  for  advertising  or  free  circu- 


92  BUSINESS    MAN'S    ENCYCLOPEDIA. 

lation,  or  not  having  a  legitimate  list  of  subscribers, 
are  excluded  from  the  pound  rate,  and  pay  third-class 
rates. 

Second-class  publications  must  possess  legitimate 
subscription  lists  approximating  50  per  cent  of  the  num- 
ber of  copies  regularly  issued  and  circulated  by  mail  or 
otherwise.  Unless  they  do  pound-rate  privileges  are 
revoked  or  withheld. 

Whenever  the  general  character  and  manner  of  issue 
of  a  periodical  publication  is  changed  in  the  interest 
of  the  publisher,  or  of  advertisers  or  other  persons,  by 
the  addition  of  unusual  quantities  of  advertisements,  or 
of  matter  different  from  that  usually  appearing  in  the 
publication,  or  calculated  to  give  special  prominence  to 
some  particular  business  or  businesses,  or  otherwise — 
especially  where  large  numbers  of  copies  are  circulated 
by  or  in  the  interest  of  particular  persons — the  second- 
class  rates  of  postage  will  be  denied  that  issue;  and  if 
there  be  repeated  instances  of  such  irregularities,  the 
publication  will  be  excluded  from  the  mails  as  second- 
class  matter. 

Such  "Christmas,"  "New  Year's,"  and  other  special 
issues,  including  "Almanacs,"  as  are  excluded  from 
second-class  privileges  by  the  terms  above  specified  may 
be  transmitted  by  mail  only  when  prepaid  oy  postage 
stamps  at  the  rate  applicable  to  third-class  matter 
— one  cent  for  each  two  ounces  or  fraction  thereof. 

Publications  sent  to  actual  subscribers  in  the  county 
where  published  are  free,  unless  mailed  for  local  de- 
livery at  a  letter-carrier  office. 

Rates  of  postage  on  transient  newspapers,  maga- 
zines, or  periodicals,  one  cent  for  each  four  ounces  or 
fraction  thereof.  It  should  be  observed  that  the  rate 
is  one  cent  for  each  four  ounces,  not  one  cent  for  each 
paper  contained  in  the  same  wrapper.  This  rate  ap- 
plies only  when  a  complete  copy  is  mailed.  Parts  of 
second-class  publications  or  partial  or  incomplete  copies 
are  third-class  matter.  Second-class  matter  will  be  en- 
titled to  special  delivery  when  special  delivery  ten-cent 
stamps  are  affixed  in  addition  to  the  regular  postage. 

Transient  second-class  matter  must  be  so  wrapped 
as  to  enable  the  postmaster  to  inspect  it.    The  sender's 


BUSINESS     LAW.  93 

name  and  address  may  be  written  in  them,  but  any 
other  writing  subjects  the  matter  to  letter  postage.  The 
name  and  address  of  the  sender  may  also  be  written 
on  the  wrapper. 

Third-Class  Matter. — Mail  matter  of  the  third  class 
includes  printed  books,  pamphlets,  engravings,  circu- 
lars in  print  (or  by  the  hectograph,  electric-pen,  or 
similar  process  when  at  least  twenty  identical  copies, 
separately  addressed,  are  mailed  at  postofRce  windows 
at  one  time),  and  other  matter  wholly  in  print,  proof- 
sheets,  corrected  proof-sheets,  and  manuscript  copy  ac- 
companying the  same. 

The  rate  on  matter  of  this  class  is  one  cent  for  each 
two   ounces   or   fraction   thereof. 

Manuscript  unaccompanied  by  proof-sheets  must  pay 
letter  rates. 

Third-class  matter  must  admit  of  easy  inspection, 
otherwise  it  will  be  charged  letter  rates  on  delivery.  It 
must  be  fully  prepaid,  or  it  will  not  be  forwarded. 

The  limit  of  weight  is  four  pounds,  except  single 
books  in  separate  packages,  on  which  the  weight  is  not 
limited.  It  is  entitled,  like  matter  of  the  other  classes, 
to  special  delivery  when  special  delivery  stamps  are 
affixed  in  addition  to  the  regular  postage. 

Upon  matter  of  the  third-class,  or  upon  the  wrapper 
or  envelope  inclosing  the  same,  or  the  tag  or  label  at- 
tached thereto,  the  sender  may  write  his  own  name,  oc- 
cupation, and  residence  or  business  address,  preceded  by 
the  word  "from,"  and  may  make  marks  other  than  by 
written  or  printed  words  to  call  attention  to  any  word 
or  passage  in  the  text,  and  may  correct  any  typographi- 
cal errors.  There  may  be  placed  upon  the  blank  leaves 
or  cover  of  any  book,  or  printed  matter  of  the  third- 
class,  a  simple  manuscript  dedication  or  inscription  not 
of  the  nature  of  a  personal  correspondence.  Upon  the 
wrapper  or  envelope  of  third-class  matter,  or  the  tag 
or  label  attached  thereto,  may  be  printed  any  matter 
mailable  as  tiiird-class,  but  there  must  be  left  on  the 
address  side  a  space  sufficient  for  the  legible  address 
and  necessary  stamps. 

Fourth-Class  Matter. — Fourth-class  matter  is  all  mail- 
able matter  not  included  in  the  three  preceding  classes 


94  BUSINESS    MAN'S    ENCYCLOPEDIA. 

which  is  so  prepared  for  mailing  as  to  be  easily  with- 
drawn from  the  wrapper  and  examined.  It  embraces 
merchandise  and  samples  of  every  description,  and  coin 
or  specie. 

Rate  of  postage,  one  cent  for  each  ounce  or  frac- 
tion thereof  (except  seeds,  roots,  bulbs,  cuttings,  scions, 
and  plants,  the  rate  on  which  is  one  cent  for  each  two 
ounces  or  fraction  thereof.)  This  matter  must  be  fully 
prepaid,  or  it  will  not  be  forwarded.  The  affixing  of 
special  delivery  ten-cent  stamps  in  addition  to  the  regu- 
lar postage  entitles  fourth-class  matter  to  special  de- 
livery.    (See  remarks  under  "first-class  matter.") 

Articles  of  this  class  that  are  liable  to  injure  or  de- 
face the  mails,  such  as  glass,  sugar,  needles,  nails,  pens, 
etc.,  must  be  first  wrapped  in  a  bag,  box  or  open  en- 
velope and  then  secured  in  another  outside  tube  or 
box,  made  of  metal  or  hard  wood,  without  sharp  cor- 
ners or  edges,  and  having  a  sliding  clasp  or  screw  lid, 
thus  securing  the  articles  in  a  double  package.  The 
public  should  bear  in  mind  that  the  first  object  of  the 
department  is  to  transport  the  mails  safely,  and  every 
other  Interest  is  made  subordinate. 

Such  articles  as  poisons,  explosives,  or  inflammable 
articles,  live  animals,  insects,  fruits  or  vegetable  mat- 
ter liable  to  decomposition,  or  substances  exhaling  a 
bad  odor  will  not  be  forwarded  in  any  case. 

Firearms  may  only  be  sent  in  detached  parts. 

The  regulations  respecting  the  mailing  of  liquids  are 
as  follows:  Liquids,  not  ardent,  vinous,  spirituous,  or 
or  malt,  and  not  liable  to  explosion,  spontaneous  com- 
bustion, or  ignition  by  shock  or  jar,  and  not  inflammable 
(such  as  kerosene,  naphtha,  or  turpentine),  may  be  ad- 
mitted to  the  mails  for  transportation  within  the 
United  States.  Samples  of  altar  or  communion  wine  are 
mailable.  When  in  glass  bottles  or  vials,  such  bottles 
or  vials  must  be  strong  enough  to  stand  the  shock  of 
handling  in  the  mails,  and  must  be  inclosed  in  a  metal, 
wooden,  or  papier-mache  block  or  tube,  not  less  than 
three-sixteenths  of  an  inch  thick  in  the  thinnest  part, 
strong  enough  to  support  the  weight  of  mails  piled  in 
bags  and  resist  rough  handling;  and  there  must  be  pro- 
vided, between   the  bottle  and   said   block  or  tube,   a 


BUSINESS    LAW.  95 

cushion  of  cotton,  felt  or  some  other  absorbent  suffi- 
cient to  protect  the  glass  from  shock  in  handling;  the 
block  or  tube  to  be  impervious  to  liquids,  including  oils, 
and  closed  by  a  tightly  fitting  lid  or  cover,  so  adjusted 
as  to  make  the  block  or  tube  water  tight  and  to  pre- 
vent the  leakage  of  the  contents  in  case  of  breaking  of 
the  glass.  When  inclosed  in  a  tin  cylinder,  metal  case, 
or  tube,  such  cylinder,  case,  or  tube  should  have  a  lid 
or  cover  so  secured  as  to  make  the  case  or  tube  water 
tight,  and  should  be  securely  fastened  in  a  wooden  or 
papier-mache  block  (open  only  at  one  end),  and  not 
less  in  thickness  and  strength  than  above  described. 
Manufacturers  or  dealers  intending  to  transmit  articles 
or  samples  in  considerable  quantities  should  submit  a 
sample  package,  showing  their  mode  of  packing,  to  the 
postmaster  at  the  mailing  office,  who  will  see  that  the 
conditions  of  this  section  are  carefully  observed.  The 
limit  of  admissible  liquids  and  oils  is  not  exceeding 
four  ounces,  liquid  measure. 

Limit  of  weight  of  fourth-class  matter  (excepting 
liquids),  four  pounds. 

The  name  and  address  of  the  sender,  preceded  by  the 
word  "from,"  also  any  marks,  numbers,  names,  or  let- 
ters for  the  purpose  of  description,  such  as  prices,  quan- 
tity, etc.,  may  be  written  on  the  wrapper  of  fourth- 
class  matter  without  additional  postage  charge.  A  re- 
quest to  the  delivering  postmaster  may  also  be  written 
asking  him  to  notify  the  sender  in  case  the  package  is 
not  delivered. 

Registration. — All  kinds  of  postal  matter  may  be  reg- 
istered at  the  rate  of  eight  cents  for  each  package  in 
addition  to  the  regular  rates  of  postage,  to  be  fully  pre- 
paid by  stamps.  Each  package  must  bear  the  name 
and  address  of  the  sender,  and  a  receipt  will  be  re- 
turned from  the  person  to  whom  addressed.  Mail  mat- 
ter can  be  registered  at  all  postoffices  in  the  United 
States. 

An  indemnity — not  to  exceed  $25  for  any  one  regis- 
tered piece,  or  the  actual  value  of  the  piece,  if  it  is 
less  than  §25 — shall  be  paid  for  the  loss  of  first-class 
registered  matter. 


96  BUSINESS    MAN'S    ENCYCLOPEDIA. 

Domestic  Money  Orders. — Domestic  money  orders 
are  issued  by  money-order  postoffices  for  any  amount 
up  to   $100,  at  the  following  rates.: 

For  sums  not  exceeding  $2.50,  3  cents;  over  $2.50  to 
$5,  5  cents;  over  $5  to  $10,  8  cents;  over  $10  to  $20,  10 
cents;  over  $20  to  $30,  12  cents;  over  $30  to  $40,  15 
cents;  over  $40  to  $50,  18  cents;  over  $50  to  $60,  20 
cents;  over  $60  to  $75,  25  cents;  over  $75  to  $100,  30 
cents. 

Stamped  Envelopes. — Embossed  stamped  envelopes 
and  newspaper  wrappers  of  several  denominations, 
sizes,  and  colors  are  kept  on  sale  at  postoflBices,  singly 
or  in  quantities,  at  a  small  advance  on  the  postage  rate. 
Stamps  cut  from  stamped  envelopes  are  valueless;  but 
postmasters  are  authorized  to  give  good  stamps  for 
stamped  envelopes  or  newspaper  wrappers  that  may  be 
spoiled  in  directing,  if  presented  in  whole  condition  and 
with  satisfactory  evidence. 

All  matter  concerning  lotteries,  gift  concerts,  or 
schemes  devised  to  defraud  the  public,  or  for  the  pur- 
pose of  obtaining  money  under  false  pretences,  is  de- 
nied  transmission   in   the   mails. 

Applications  for  the  establishment  of  post-offices 
should  be  addressed  to  the  First  Assistant  Postmaster- 
General,  accompanied  by  a  statement  of  the  necessity 
therefor.  Instructions  will  then  be  given  and  blanks 
furnished  to  enable  the  petitioners  to  provide  the  de- 
partment with  the  necessary  information. 

The  franking  privilege  was  abolished  July  1,  1873, 
but  the  following  mail  matter  may  be  sent  free  by  leg- 
islative saving  clauses,  viz: 

(1)  All  public  documents  printed  by  order  of  con- 
gress, the  Congressional  Record  and  speeches  contained 
therein,  franked  by  members  of  congress,  or  the  secre- 
tary of  the  senate,  or  clerk  of  the  house.  (2)  Seeds 
transmitted  by  the  secretary  of  agriculture,  or  by  any 
member  of  congress,  procured  from  that  department. 
(3)  Letters  and  packages  relating  exclusively  to  the 
business  of  the  government  of  the  United  States,  mailed 
only  by  officers  of  the  same,  publications  required  to 
be  mailed  to  the  librarian  of  congress  by  the  copyright 
law,  and  letters  and  parcels  mailed  by  the  Smithsonian 


BUSINESS     LAW.  97 

Institution.  All  these  must  be  covered  by  specially 
printed  "penalty"  envelopes  or  labels.  (4)  The  vice- 
president,  members  and  members-elect  and  delegates 
and  delegates- elect  to  congress  may  frank  any  mail 
matter,  not  over  two  ounces  in  weight,  upon  official  or 
departmental  business. 

All  communications  to  government  officers  and  to 
members  of  congress  are  required  to  be  prepaid  by 
stamps. 

RATES  OF  POSTAGE  TO  REPUBLIC  OF  PANAMA. 

Letters,  5  cents  for  each  half  ounce  or  fraction  of 
half  ounce. 

Postal  cards,  single,  2  cents;  with  paid  reply,  4  cents 
each. 

Prints,  1  cent  for  each  weight  of  two  ounces  or 
fraction  of  two  ounces. 

Commercial  papers,  1  cent  for  each  weight  of  two 
ounces  or  fraction  of  two  ounces,  with  a  minimum 
charge  of  5  cents. 

Samples  of  merchandise,  1  cent  for  each  weight  of 
two  ounces  or  fraction  of  two  ounces,  with  a  minimum 
charge  of  2  cents.    Registration  fee,  8  cents. 


98  BUSINESS    MAN'S    ENCYCLOPEDIA, 

BOOK  II 
BUSINESS  METHODS 

CORRESPONDENCE 

The  importance  of  letter  writing,  while  considered 
of  theoretical  value  by  many  business  men,  is  often 
viewed  from  the  standpoint  that  they  themselves  write 
a  good  letter  and  should  be  therefore  slow  to  change 
their  individual  style  to  conform  to  another  standard 
than  their  own.  The  test  of  a  business  letter  as  of  an 
ad,  is,  does  it  do  the  thing  required  of  it,  i.  e.,  get  the 
business  in  the  best  possible  manner  and  to  the  best 
advantage, — and,  the  business  having  been  secured, — 
it  becomes  the  additional  function  of  the  correspond- 
ence to  cultivate  it  and  "keep  it  coming." 

ELEMENTS  OF  A   GOOD   BUSINESS   LETTER. 

The  essentials  which  go  to  make  up  a  good  business 
letter  may  be  divided  into  two  classes — mechanical 
make-up,  and  contents.  Before  a  letter  can  come  into 
existence  the  mechanical  side  must  be  attended  ta 
The  subject  matter  may  be  pertinent  and  well  com- 
posed and  yet  the  letter  itself  be  so  arranged  typo- 
graphically and  so  disposed  on  the  page  that  the  unity 
of  the  whole  is  lost.  The  display  as  a  whole  should 
balance.  Before  the  stenographer  starts  the  address, 
calculation  should  be  made  as  to  how  many  lines  the 
letter  will  run  and  as  to  how  it  should  be  disposed  on 
the  page.  The  body  of  the  letter  should  neither  be 
crowded  near  the  top  nor  bottom  of  the  sheet,  but 
should  be  so  placed  that,  viewed  in  connection  with  the 
letter  head,  it  presents  a  well  balanced  and  artistic 
effect.  This  effect  is  often  underrated,  being  in  fact 
passed  by  without  a  thought  by  the  average  stenog- 
rapher, and  the  ordinary  business  man  is  so  busy  seeing 
that  his  dictation  is  correctly  transcribed  that  he  gives 
little  thought  to  this  essential.  Harmony  of  color  effect 
should  be  observed.  A  yellow  paper  bearing  the  firm 
announcement  in  blue,  the  letter  in  green  and  signed 
with  purple  ink  is  not  to  be  recommended. 


BUSINESS    METHODS.  99 

Letters  blurred  in  copying  and  wet  from  the  press 
or  otherwise  violating  the  rule  of  neatness  cannot  help 
but  produce  an  unfavorable  impression.  Orthography 
and  capitalization,  particularly  of  proper  names,  should 
be  exact  and  uniform.  A  misspelled  word  in  the  body  of 
a  letter,  particularly  if  a  mere  transposition  of  letters 
in  typewriting,  may  occasionally  slip  in  and  do  no  par- 
ticular damage,  but  the  misspelling  of  the  name  of  the 
party  addressed  may  lose  an  order,  and  cannot  help  but 
militate  against  the  general  effect  of  the  letter.  Neat- 
ness— uncompromising  neatness — that  should  be  the  first 
effect  of  a  letter,  giving  the  idea  that  the  firm  putting 
out  the  writing  is  thorough  master  of  the  minor  (as 
well  as  the  major)  details  of  its  business. 

Contents. — In  letter-writing,  contents  may  be  divided 
into  subject  matter  and  expression.  The  subject  mat- 
ter is,  broadly  speaking,  what  the  writer  says.  This 
should  coincide  with  two  other  things — (1)  what  the 
writer  wants  to  say,  and  (2)  what  the  one  addressed 
wants  to  know.  Something  which  is  the  a  b  c  of  life 
and  a  mere  matter  of  routine  to  the  writer  in  a  certain 
line  may  be  abstruse  and  complicated  to  a  non-technical 
reader.  To  avoid  an  offensive  simplicity  of  language  on 
the  one  hand  and  excessive  technicality  on  the  other 
is  one  of  the  tests  of  a  good  business  correspondent. 
There  is  a  tendency  to  slight  simple  questions  asked  by 
different  inquirers  day  after  day,  which  must  be  avoided 
by  putting  oneself  in  the  place  of  the  one  asking  the 
question,  and  giving  the  knowledge  for  which  he  is 
looking. 

One  of  the  most,  if  not  the  most,  important  essen- 
tials of  a  good  business  letter  lies  in  correct  expression. 
The  one  thing  which  causes  more  failures  in  business 
correspondence  than  any  other,  is  the  incorporation  of 
personal  peculiarities  in  a  letter.  There  may  be  called 
to  mind,  in  fact,  more  than  one  established  business 
backed  by  ample  capital,  having  a  broad  field  and 
financed  by  capable  and  conservative  business  men, 
that  is  at  the  mercy  of  a  poor  correspondent.  This  is 
ably  expressed  by  Forrest  Crissy,  who  says: 

"So  apparent  must  be  the  importance  of  this  branch 
(tact  and  tone  in  business  letters)  of  business  system- 


100  BUSINESS    MAN'S    ENCYCLOPEDIA. 

atization,  that  scarcely  a  word  of  argument  is  needed 
to  enforce  its  necessity.  Very  recently  a  large  whole- 
sale merchant  said  to  me:  1  have  recently  been  obliged 
to  discharge  the  head  of  my  credit  department — my 
confidential  man.  He  is  honest,  conservative  and  shrewd, 
but  recently  I  have  been  awakened  to  the  fact  that  his 
incapacity  to  write  a  letter  which  does  not  leave  a  sting, 
a  chill,  or  at  least  a  sense  of  lofty  indifference,  is  hurt- 
ing my  business  more  than  would  some  downright 
reckless  blunders.  When  he  writes  a  letter  granting  a 
good  customer  a  larger  line  of  credit  he  gives  it  a  twist 
that  somehow  makes  that  customer  wish  he  hadn't 
asked  for  credit  and  thus  placed  himself  under  added 
obligations.  And  if  he  refuses  to  meet  the  request  for 
such  a  favor  the  refusal  is  so  put  that  it  seems  a  studied 
effort  to  conceal  a  strong  unwillingness  to  give  any 
credit  at  all.  Yet  this  man  has  always  considered  him- 
self an  adept  in  letter-writing — and  for  a  time  he  com- 
pletely hypnotized  me  into  that  view.  But  at  last  the 
steady  withdrawal  of  patronage  and  the  occasional  out- 
spoken retorts  which  his  letters  provoked  forced  upon 
me  a  recognition  of  the  real  condition  of  affairs.  Then 
I  went  out  after  a  man  who  could  write  a  business  let- 
ter that  had  just  the  right  ring  to  it;  that  was  neither 
so  sloppy  that  it  sounded  hypocritical  or  so  stiff  and 
stilted  that  there  was  no  tone  of  good  hearty  business 
friendliness  in  it.  I  have  found  him.  He  comes  high, 
but  the  difference  in  results  is  remarkable.  Of  course, 
there  are  other  things  required  than  this  form  of  lit- 
erary ability — if  that's  what  you'd  call  it.  He  must 
have  business  experience,  business  judgment  and  all 
the  other  cardinal  business  virtues;  but  the  addition 
of  this  peculiar  capacity  to  write  business  letters  that 
hit  the  mark  is  a  rare  gift  and  makes  him  a  star  man.'  " 

Simplicity  and  clearness  as  an  element  of  expression 
cannot  be  rated  too  highly.  The  saying  of  a  thing  in 
the  plain  language  of  the  common  people,  not  only  acids 
to  the  style  and  dignity  of  a  letter,  but  has  the  most 
vital  element  of  being  understandable.  As  Chas.  R. 
Weirs  says,  "Eloquence,  either  real  or  imaginary,  has 
no  place  in  a  business  letter." 

Whatever  else  may  be  neglected  in  writing,  courtesy 


BUSINESS     METHODS.  101 

should  not  be  slighted.  A  man  may  be  told  nearly 
anything  face  to  face — it  is  qualified  by  the  bearing, 
tone  of  voice,  manner  and  earnestness  of  the  speaker. 
A  sentence  may  be  given  an  entirely  different  meaning 
by  a  tone  or  gesture — it  may  even  be  diplomatically 
changed  after  partly  spoken,  to  make  it  conform  to 
the  unconscious  demand  of  the  listener,  and  most  of  all 
— spoken  speech  is  transient.  What  is  written,  on  the 
other  hand,  is  put  down  in  black  and  white  to  stay. 
The  record  is  permanent.  It  can  be  offered  in  evidence, 
can  be  dug  up  years  afterwards  from  a  musty  file,  and 
discourteously  written  can  queer,  not  only  an  imme- 
diate sale,  but  the  sales  of  a  decade. 

Length. — Letters  often  tend  to  verbosity  from  the 
fact  that  they  are  dictated  instead  of  written.  Were  a 
man  to  write  his  letters  himself  with  pen  and  ink  he 
would  study  brevity  and  conciseness  of  expression,  but 
having  letters  written  for  him,  he  will  dictate  more 
than  he  would  write.  Brevity  is  not  always  desirable. 
Some  people — particularly  those  receiving  few  letters — 
like  to  receive  lengthy  correspondence.  Getting  few 
letters,  they  wish  those  long  and  newsy.  A  letter  is  an 
event  to  some  patrons  and  cannot  be  too  long  for  a 
careful  perusal.  In  this  class  of  letters  the  party  ad- 
dressed may  be  often  appealed  to  in  conversational 
style;  as,  "Judge  of  the  goods  yourself,  Mr.  Brown," 
"We  ask  you,  Mr.  Smith,  if  we  have  not  treated  you 
fairly?"  etc.  At  the  other  extreme  is  the  business  man, 
particularly  the  city  business  man.  To  him,  brevity  to 
the  point  of  curtness  is  always  welcome.  As  someone 
has  alliteratively  said,  the  formula  for  a  business  letter 
to  a  busy  man  is:  Sir:    Say  it.     Stop! 

Judging  the  Other  Man's  Letter. — One  of  the  pre- 
requisites of  a  good  correspondent  is  the  ability,  in- 
herent or  acquired  to  judge  the  general  character  and 
status  of  the  writer  by  means  of  his  letters.  Until  the 
last  few  years  the  letter-head  of  a  firm  was  a  con- 
siderable guide  to  the  standing  of  the  company  putting 
it  out,  but  good  printing  is  now  much  more  common 
and  many  one-horse  concerns  put  out  conservative, 
well-gotten-up  stationery.  Ability  to  recognize  the  ef- 
forts of  an  amateur  or  schoolboy  inquiring  for  a  cata- 


102  BU8INEiSS    MAN'S    ENCYCLOPEDIA. 

log  with  no  intention  of  buying  and  to  treat  the  writer 
accordingly,  call  for  almost  occult  powers.  The  presi- 
dent of  one  of  the  large  machinery  companies  putting 
out  a  cement  mixer  selling  at  $850.00,  relates  that  one 
of  the  company  travelers  visited  Detroit  in  response 
to  an  apparently  good  lead  and  found  a  twelve-year-old 
boy  wanted  a  dozen  cement  mixers  "to  go  into  the  mail- 
order business  with."  Some  companies  putting  out  ex- 
pensive catalogs  write  a  letter  asking  a  doubtful  in- 
quirer to  fill  out  an  information  blank  before  sending 
a  catalog.  The  correct  interpretation  of  the  personality 
of  a  writer  means  the  saving  of  dollars  of  expenditure 
as  well  as  the  ability  to  write  him  correctly.  In  a  fire 
insurance  concern  employing  hundreds  of  agents  it 
would  be  easy  for  a  manager  to  inform  himself  through 
his  special  agents  as  to  each  agent's  nationality,  educa- 
tion, experience  in  the  business,  etc.,  and  vary  his  cor- 
respondence accordingly,  while  a  mail-order  house 
might  have  no  means  of  judging  a  man  but  by  his  bare 
letter. 

Form  Letters. — A  form  .etter  is  one  of  a  series  of 
letters,  to  be  sent  on  similar  occasions.  Such  letters 
are  usually  in  imitation  typewriting  with  blanks  left 
for  the  name  of  the  party  addressed,  and  when  care- 
fully executed  are  a  close  imitation  of  a  typewritten 
letter.  Form  letters  vary  from  those  not  to  be  distin- 
guished from  actual  typewriting,  to  the  stock  letters  of 
collection  agencies,  in  which  no  attempt  is  made  to  imi- 
tate the  machine.  Some  writers  use  a  number  of  short 
forms  or  inserts  which  they  use  in  dictating  to  avoid 
a  repetition  of  dictation. 

Letters  of  Recommendation. — The  promiscuous  wri- 
ting of  letters  of  recommendation  has  done  much  to 
cheapen  the  effect  of  recommends.  Many  firms  refuse 
such  letters  entirely.  Perhaps  the  best  plan  is  to  have 
an  employe,  when  leaving,  use  his  former  employer's 
name  as  a  reference. 

CREDITS 

The  science  of  credits  is  not  an  exact  one  and  not 
one  to  which  the  same  rules  are  applicable  at  all  times 
and  for  all  lines  of  business.    The  endeavor  of  the  credit 


BUSINESS    METHODS.  103 

man  is  to  keep  his  losses  as  near  the  zero  point  as  pos- 
sible without  needlessly  limiting  sales. 

Knowledge  Necessary  to  Credit  Man. — The  credit 
man  of  a  house  selling  a  line  of  goods  over  an  extended 
territory  should  have  a  complete  knowledge  of  the  sev- 
eral phases  of  business  minutely  associated  with  exten- 
sion of  credits. 

General  Financial  Conditions. — The  condition  of  a 
territory  as  regards  money  is  important.  A  compara- 
tively small  area  may  be  experiencing  business  depres- 
sion because  of  continued  wet  weather,  extension  of  a 
new  railroad  cutting  off  trade,  crop  failure,  or  similar 
causes,  while  other  territory  in  the  same  locality  is  en- 
joying phenomenal  prosperity.  Some  towns  in  local 
option  districts  enjoy  good  trade  at  certain  times  only, 
depending  on  the  predominance  of  the  "wet'*  or  the 
"dry"  faction.  No  condition  affecting  financial  condi- 
tions is  too  small  to  aid  in  determining  the  financial 
future  of  a  district. 

Business  Detail. — The  cost  of  production,  amount  of 
stock  on  hand,  and  in  fact  all  the  operative  details  of 
his  own  business  should  be  thoroughly  understood  by 
the  credit  man.  The  more  complete  his  knowledge  is  of 
the  details  of  his  firm's  business,  the  better  he  will  be 
able  to  judge  wisely  in  putting  out  goods. 

Knowledge  of  Customer's  Business. — In  order  to 
grant  credits  intelligently,  a  credit  man  should  know 
how  the  customer's  stock  balances,  and  what  per  cent 
he  is  selling  him.  A  buyer  running  a  general  store  may 
be  rated  good  for  $15,000,  and  yet  $1,000  worth  of  a 
certain  line  of  goods  may  be  in  excess  of  his  credit  and 
out  of  proportion  to  the  remainder  of  his  stock. 

Knowledge  of  Finance  and  Law. — In  judging  the  re- 
lation of  incoming  money  to  the  financial  strength  and 
policy  of  his  house,  the  credit  man  should  know  some- 
thing of  finance,  while  a  knowledge  of  the  law  of 
credits,  collections,  exemptions,  bankruptcy  and  allied 
subjects  is  of  vital  importance. 

SOURCES    OF    CREDIT    INFORMATION. 

To  bring  the  making  of  credits  down  to  a  systematic 
and  scientific  basis  there  are  four  sources  from  which 


104  BUSINESS    MAN'S    ENCYCLOPEDIA. 

the  credit  man  may  draw:  Mercantile  agencies,  re- 
ports from  the  trade,  reports  from  the  salesmen,  re- 
ports from  local  banks  or  attorneys. 

Mercantile  Agencies. — The  report  of  a  mercantile 
agency  is  the  basis  from  which  a  credit  man  can  work, 
all  additional  information  qualifying  the  report  given 
him.  His  past  experience  must  determine  its  degree  of 
accuracy  and  to  what  extent  a  report  is  to  be  abso- 
lutely relied  upon.  The  effect  upon  the  merchant  of  the 
existence  and  supervision  of  the  agency,  is  a  salutary 
one,  giving  an  extra  incentive  to  keep  his  commercial 
record  clean. 

Trade  Information. — By  exchanging  information  with 
other  credit  men  in  the  same  or  allied  lines  of  trade, 
many  problems  in  credits  may  be  simplified.  Such  in- 
formation, however,  has  the  disadvantage  of  being  slow 
to  secure,  as  a  merchant's  creditors  may  be  widely 
separated. 

Salesmen's  Reports. — Information  from  salesmen, 
under  ordinary  conditions,  is  peculiarly  valuable.  The 
salesman  is  posted  as  is  no  one  else  by  frequent  visits, 
knows  the  buyer's  strong  and  weak  points,  the  general 
condition  of  trade  in  the  town  and  surrounding  coun- 
try, and  if  shrewd,  can  intuitively  sense  the  moral  haz- 
ard of  an  account  from  actual  contact  with  all  the  con- 
ditions surrounding  it.  If  a  salesman  reports  his  opin- 
ion of  each  risk  assumed  by  the  house  it  does  not  take 
long  to  tell  the  value  of  his  observations  and  whether  he 
possesses  the  capacity  for  giving  a  dependable  rating. 

Local  Sources. — Information  obtained  from  local 
sources  is  open  to  various  faults,  partiality  or  hostility 
to  the  one  reported  on  or  indifference  to  the  correct- 
ness of  the  report,  being  among  the  number.  Banks 
often  take  the  attitude  that  they  are  not  called  upon  to 
make  a  report,  particularly  upon  a  customer  not  a  de- 
positor and  of  whom  they  have  no  accurate  knowledge 
other  than  of  a  general  nature.  Attorneys'  reports  are 
of  all  kinds,  frequently  carelessly  irresponsible,  the  ordi- 
nary attorney  not  being  an  accurate  judge  of  the  finan- 
cial condition  of  a  business  man. 


BUSINESS    METHODS,  105 

COLLECTIONS 

In  collections  the  main  thing  is  to  get  the  money 
when  due.  This  is  more  than  it  seems  on  the  face  of 
the  statement.  The  ideal  condition  will  never  be 
reached  when  each  customer  pays  his  account  when 
due,  asking  and  expecting  no  favors. 

Prompt  Payments. — Customers  can  be  educated  to 
the  fact  that  payments  are  to  be  met  unconditionally  at 
maturity  of  account.  Prompt  payment  of  bills  is  no 
more  to  ask  of  a  customer  than  is  the  prompt  delivery 
of  goods  ordered  by  him.  The  country  trade  often  takes 
this  stand:  "We  buy  of  your  house.  They  should  con- 
sider it  a  favor  to  get  our  trade.  Hence,  if  we  desire 
to  wait  a  few  days  in  the  payment  of  a  certain  bill,  the 
house  should  not  hurry  us,  as  one  overdue  account  can- 
not make  any  difference  to  them."  This  stand  would  be 
comparatively  reasonable  if  the  credit  man  could  know, 
first,  the  exact  condition  of  the  business  affairs  of  the 
debtor;  second,  that  he  desired  a  reasonable  extension, 
and  was  not  simply  ignoring  communications  with  a 
view  of  not  giving  them  a  square  deal.  As  collections 
are  made,  this  tendency  must  be  combated  and  over- 
come, and  those  customers  habitually  making  such  an 
excuse  must  be  educated  otherwise. 

Rendering  Statements. — Statements  should  be  ren- 
dered at  the  time  the  account  matures,  not  the  first  and 
the  fifteen  of  each  month.  Then  the  statement  as  sent 
means  something  decisive — "remittance  expected." 

Sight  Draft. — The  efficacy  of  a  sight  draft  as  a 
means  of  collection  except  in  small  towns  or  country 
neighborhoods  where  a  bank  holds  up  merchants  close 
to  the  credit  line,  is  fast  growing  less.  There  was  a 
time  when  the  return  of  a  draft  meant  impairment  of 
credit  for  the  debtor,  but  that  does  not  now  always  hold, 
particularly  when  the  draft  is  drawn  through  a  bank 
other  than  the  one  at  which  the  drawee  does  business. 
It  aids  to  no  small  degree  to  send  drafts  through  the 
bank  at  which  the  debtor  has  his  deposit.  If  he  has 
not  the  money  to  take  up  the  draft  he  cannot  give  an 
evasive  request  for  return,  the  notification  is  much  more 
liable    to    be,    "Wants    extension, — will    write."      Some 


106  BU8INE88    MAN'S    ENCYCLOPEDIA. 

houses  have  a  rule  to  draw  through  the  First  National 
Bank,  if  there  be  one.  This  is  not  to  be  recommended, 
as  both  the  bank  and  the  customer  will  be  better 
pleased  and  result  be  much  more  satisfactory  if  the 
bank  at  which  the  customer  is  a  depositor  is  used. 

Letters  Following  a  Draft. — ^When  a  draft  has  been 
refused  payment,  if  the  customer  does  not  write  imme- 
diately, a  tactful  letter  from  the  house  should  go  forth. 
This  should  not  be  a  collection  letter  demanding  imme- 
diate payment,  or  worst  of  all,  a  form  letter,  but  a 
heart  to  heart  letter,  asking  why  payment  has  been  de- 
layed. 

SPECIFIC  APPLICATION. 

Collections  vary  so  much  in  character,  size  and  sur- 
rounding conditions  that  anything  like  a  general  rule 
cannot  be  prescribed.  Classified  as  to  size,  the  follow- 
ing methods  may  be  considered  representative: 

Under  Ten  Dollars. — Where  one  or  a  number  of 
small  collections  are  outstanding,  a  statement  is  first 
sent  to  each  debtor,  followed  in  five  days  by  a  personal 
letter,  either  with  or  without  notice  of  draft  to  be  drawn 
in  a  specified  time.  After  draft  is  drawn  and  refused 
send  collection  to  Justice  of  the  Peace  if  delinquent 
lives  in  small  town  or  in  the  country.  Justices  of  the 
Peace  commonly  are  very  thorough  in  their  collection 
methods,  are  usually  well  acquainted  in  their  district 
and  rarely  if  ever  misappropriate  funds,  while  their 
charge  is  nominal,  often  being  but  10  per  cent,  where 
an  attorney  would  charge  several  times  that  sum.  Banks 
often  effect  small  collections,  but  seldom  do  more  than 
notify  the  delinquent.  Bank  charges  on  a  collection  are 
uniformly  reasonable.  Collection  agencies  using  the 
"letter  system"  should  be  used  sparingly  if  the  trade 
of  the  delinquent  is  a  consideration.  The  "letter  sys- 
tem," in  which  a  series  of  letters  threatening  suit,  at- 
tachment, and  the  like  are  mailed  the  delinquent,  are 
peculiarly  effective  for  a  list  of  country  collections,  the 
cost  averaging  probably  50  per  cent.  Small  collections 
not  closed  off  by  the  above  method  may  be  considered 
practically  worthless.  Where  trade  is  to  be  retained, 
tactful  personal  letters  following  a  statement  are  best. 


BUSINESS     METHODS.  107 

Ten  to  Fifty  Dollars. — Accounts  of  this  size  may  be 
handled  either  as  given  above  or  through  the  local  bank. 
Where  parties  are  good  but  slow,  bank  methods  are 
usually  satisfactory. 

Fifty  to  One  Hundred  Dollars. — To  get  immediate 
results  turn  over  to  a  collector,  preferably  one  con- 
nected with  or  vouched  for  by  the  house.  Where  a 
debtor  is  in  danger  of  becoming  insolvent  a  bank  or 
attorney  will  often  protect  local  creditors  against  en- 
forcement of  claims  of  an  outside  house.  A  collector 
may  often  make  a  settlement  by  being  on  the  ground 
and  obtaining  security  and  so  protect  his  house  from 
an  assignment  or  failure  of  the  debtor. 

Upwards  of  One  Hundred  Dollars. — Collections  of 
this  size  and  importance  require  personal  attention.  If 
the  debtor  is  within  a  reasonable  distance,  by  tele- 
phoning the  correspondent  of  the  house  or  a  bank,  in- 
formation can  be  obtained,  often  more  valuable  than 
would  be  written,  and  the  condition  of  the  debtor  can 
be  judged  accordingly,  and  the  campaign  mapped  out  to 
conform  to  conditions  reported.  A  rule  in  all  collec- 
tions should  be  to  get  the  cash — if  not,  then  unques- 
tionable security,  security  that  may  be  banked  at  not 
to  exceed  10  per  cent  discount. 

City  collections  are  materially  different  from  country 
collections,  as  the  percentage  of  losses  is  much  larger, 
from  removals  and  the  better  facilities  afforded  the  dis- 
honest or  careless  to  avoid  their  obligations.  An  ener- 
getic and  tactful  collector  will  affect  the  largest  share 
of  city  collections  when  the  amounts  are  small.  When 
large  collections  come  slow,  a  careful  investigation 
should  be  made  to  determine  the  cause. 

Suit. — Suit  as  a  rule  is  not  advisable,  except  in  cer- 
tain cases,  as  when  a  debtor  has  the  reputation  of  not 
paying  back  accounts  except  when  sued;  when  a  debtor 
has  property  which  may  be  reached  by  an  attachment, 
etc. 

BOOKKEEPING 

Bookkeeping  is  the  art  of  making  a  systematic  rec- 
ord of  business  transactions,  so  as  to  exhibit  the  re- 
sources and  liabilities  of  the  business.    The  system  in 


108  BUSINESS    MAN'S    ENCYCLOPEDIA. 

use  in  a  busineKSS,  the  business  itself  or  more  often  the 
adaptation  of  the  method  of  accounting  to  the  require- 
ments of  the  business,  determine  kind  and  number  of 
books  used.  When  but  a  single  book  is  used,  it  is 
usually  a  simple  book,  similar  in  form  to  the  common 
day-book,  in  which  are  set  down  in  the  order  of  their 
happening  such  transactions  as  are  necessarily  re- 
corded. As  it  is  not  to  advantage  to  bulk  too  many 
accounts  in  one  book,  the  cash-book,  purchase-book  and 
sales-book  are  often  used  together.  The  principal  book 
of  accounts  is  the  ledger,  it  showing  in  classified 
form  all  the  records  of  the  original  books  of  entry. 

Systems  of  Bookkeeping. — Two  systems  of  bookkeep- 
ing are  in  use,  single  entry  and  double  entry. 

Single  entry  is  most  commonly  used  by  retail  mer- 
chants and  other  similar  tradesmen.  It  keeps  no  ac- 
count of  property,  personal  accounts  alone  being  shown 
in  the  ledger,  which,  consequently  balances  only  when 
the  business  is  closed  out.  Saving  in  labor  over  double 
entry,  it  furnishes  fewer  checks  against  error.  One  of 
its  fatal  objections  for  some  classes  of  business  is  the 
lack  of  detailed  information  shown  regarding  the 
sources  of  gain  or  loss.  This  information,  as  clearly  ex- 
hibited by  the  double-entry  balance-sheet  is  often  an 
absolute  essential  in  the  determination  of  profit.  In 
single  entry,  to  determine  capital  at  any  time,  the  in- 
ventory of  resources  and  liabilities  is  taken;  the  differ- 
ence between  the  totals  indicating  the  capital.  The 
difference  between  present  and  former  capital  gives  the 
loss  or  gain. 

Double  entry  bookkeeping  requires  that  every 
transaction  be  entered  twice,  first  on  the  debtor  side  of 
one  or  more  accounts,  and  second,  on  the  creditor  side, 
thus  keeping  the  ledger  in  balance  perpetually. 

Debit  and  Credit. — The  first  law  of  double  entry  is 
that  every  debit  amount  in  one  account  must  have  a 
corresponding  credit  amount  in  some  other  account, 
and  vice  versa.  The  rule  of  debits  and  credits  may 
be  thus  summarized: 

(1)  Debit  that  which  into  the  possession  of  the  bus- 
ness  and  costs  value.  (2)  Credit  that  which  goes  out 
of  the  possession  of  the  business  and  produces  value. 


BUSINESS    METHODS.  109 

Rules  for  Journalizing. — Besides  the  above  general 
rules  the  following  specific  ones  may  be  given: 

The  proprietor  is  debited:  (1)  For  withdrawals  from 
the  business  for  personal  use;  (2)  for  liabilities  as- 
sumed by  the  business;  (3)  for  net  loss  when  the  books 
are  closed.  He  is  credited  (1)  For  all  investments  in 
the  business;  (2)  for  net  gain  when  the  books  are 
closed. 

Property  is  debited,  under  its  given  name,  when  it 
comes  into  possession  of  the  business.  It  is  credited, 
under  its  given  name  when  the  busines  parts  with  it. 

Persons  are  debited  (1)  when  they  get  into  our  debt; 
(2)  when  we  get  out  of  their  debt  and  are  credited:  (1) 
When  we  get  into  their  debt  and  (2)  when  they  get  out 
of  our  debt. 

Expense  account,  including  rent,  salaries,  insurance, 
etc.,  is  debited  for  money  paid  out  to  carry  on  the  busi- 
ness and  credited  for  the  proceeds  of  the  sale  of  any 
Item  previously  debited  to  expense  account. 

Bills  receivable  are  debited  when  received  by  the 
business  and  credited  when  the  business  parts  with 
them. 

Bills  payable  are  debited  when  redeemed  by  the 
business  and  credited  when  issued  by  the  business. 

Allowances,  as  interest,  discount,  collections,  etc., 
are  debited  under  their  given  names,  when  allowed  to 
us  by  others,  and  similarly  credited  when  allowed  by 
others  to  us. 

Trial  Balance. — The  taking  of  a  trial  balance  fre- 
quently causes  the  student  or  bookkeeper  a  great  deal 
of  waste  time,  such  mistakes  commonly  arising  from 
errors  in  posting,  though  there  is  chance  for  an  infinite 
variety  of  mistakes  to  arise.  The  following  rules  are 
of  use  in  tracing  errors: 

Go  over  the  additions  of  the  trial  balance. 

Go  over  all  additions  of  the  ledger  accounts. 
.  If  not  located,  check  your  posting  as  follows:  Trace 
each  item  from  the  journal  to  the  ledger,  and  if  found 
to  be  correct,  place  a  check  mark  at  the  left  of  the  first 
money  column  in  the  journal  and  at  the  left  of  each 
date  column  in  the  ledger. 


110  BUSINESS    MAN'S    ENCYCLOPEDIA, 

Find  the  exact  amount  of  error;  if  ten  or  some  power 
of  ten,  the  error  is  usually  in  addition. 

If  the  amount  is  exactly  the  same  as  some  amount 
in  the  journal,  the  error  is  probably  with  that  amount. 

If  the  amount  of  error  is  divisible  by  nine,  the  error 
is  probably  in  transposition  of  figures. 

If  dollars  have  been  written  as  cents  or  vice  versa, 
dividing  the  difference  by  9,  99,  or  999,  respectively,  will 
locate  a  figure  which  has  been  misplaced  one,  two  or 
three  orders  to  the  right  or  left. 

Closing  Set  of  Books. — Before  attempting  to  close  a 
set  of  books,  a  correct  trial  balance  must  be  had,  and  a 
statement  of  the  business  should  be  made  out.  The  state- 
ment of  the  business  will  give  the  figures  to  be  used  in 
closing  the  ledger  accounts,  and  by  its  use  all  errors 
will  be  avoided.  The  following  definition  should  be  kept 
in  mind: 

Inventories  show  the  value  of  the  goods  and  property 
remaining  on  hand. 

Non-speculative  accounts  are  those  on  which  we  do 
not  directly  gain  or  lose.  They  are  cash,  personal  bills, 
payable  and  bills  receivable. 

Speculative  accounts  are  those  whose  nature  it  is  to 
produce  gain  or  loss.  Merchandise,  expense,  and  like 
accounts  belong  to  this  class. 

If  the  work  of  closing  a  set  of  books  is  performed  in 
the  following  order,  there  will  never  be  any  trouble  as 
to  the  result: 

1.  Enter  inventories,  in  red  ink,  on  the  credit  side 
of  the  accounts  to  which  they  belong. 

2.  Close  all  speculative  accounts  to  loss-and-gain 
account. 

3.  Close  loss-and-gain  account  to  proprietor's  ac- 
count. 

4.  Rule  all  accounts  that  balance. 

5.  Bring  down  all  inventories  and  the  balance  of 
the  proprietor's  account. 

A  trial  balance  of  the  ledger  at  this  point  should  ex- 
actly agree  with  the  resource  and  liability  division  of 
the  statement  of  the  business. 

The  reason  for  taking  a  trial  balance  at  this  time  is 
that  we  may  be  sure  that  the  books  are  in  balance  be- 


BUSINESS    METHODS.  Ill 

fore  we  put  any  new  business  on  them.  For,  when  we 
next  attempt  to  take  a  trial  balance,  and  it  does  not 
balance,  we  would  naturally  look  for  the  error  in  the 
work  of  the  month,  when,  quite  likely,  it  would  be  in  the 
closing  of  the  accounts  or  in  the  bringing  down  of  the 
balances,  which  a  trial  balance  as  just  suggested  would 
have  brought  to  light  and  all  trouble  from  such  an  error 
have  been  saved. 

When  a  new  business  period  is  to  be  begun  and  the 
old  books  used,  no  opening  entry  is  necessary,  as  all  the 
accounts  that  would  appear  in  such  an  entry  are  already 
on  the  books. 

PRICE  MARKS 

The  use  of  a  set  of  secret  marks  with  which  to  mark 
the  price  of  goods  is  in  universal  use.  As  a  rule  the 
buying  price  only  is  marked  in  these  characters,  the 
selling  price  usually  being  in  plain  figures. 

Arbitrary  signs  are  sometimes  taken  to  designate  the 
numerals,  but  as  a  usual  thing  a  keyword  is  used,  the 
letters  of  which  stand  for  the  numerals.  Following  are 
examples : 

1234567890 

VANDERBILT 

In  a  similar  way  "MAKEPROFIT,"  "CALEBSMITH," 
or  "CHELMSFORD,"  could  be  used.  A  repeater  is 
sometimes  used  instead  of  writing  a  character  twice. 

INVESTMENTS 

Those  having  money  to  invest  may  be  classed  in 
three  groups:  First,  those  persons  who  wish  absolute 
safety  of  principal,  permanency  of  investment,  and  regu- 
larity in  the  payment  of  dividends;  second,  those  per- 
sons who  are  willing  to  take  some  risk,  looking  to  a 
higher  dividend  rate,  and  other  incidental  benefits,  such 
as  business  association  with  other  stockholders,  gain  of 
knowledge  of  corporation  affairs,  etc.,  to  indemnify  them 
for  lack  of  absolute  security  of  the  principal;  third, 
those  having  a  comparatively  small  amount  for  invest- 
ment and  willing  to  risk  their  money  in  concerns  openly 
promoted  for  the  purpose  of  enriching  the  backers  if 


112  BUSINESS    MAN'S    ENCYCLOPEDIA. 

lucky,  and  with  the  expectancy  of  reaping  large  profits 
in  a  new  and  untried  field — not  properly  called  invest- 
ments. 

Classes  of  Investments. — Investments  are  of  two 
classes:  First,  the  class  in  which  the  investors  become 
the  absolute  owners  of  the  securities,  as  in  purchases  of 
real  estate,  government  bonds,  etc. — these  being  pur- 
chase investments — and  second,  the  class  in  which  in- 
vestors advance  money  upon  the  promises  of  borrowers 
to  return  the  money  with  interest,  and  upon  the  securi- 
ties which  the  borrowers  pledge  or  bind  in  support  of 
their  promises,  as  in  loans  upon  mortgages, — these  be- 
ing loan  investments. 

Margin  of  Safety. — In  determining  the  worth  of  an 
investment,  the  difference  between  the  actual  and  per- 
manent values  of  securities  and  the  amounts  of  the  cor- 
responding investments  is  taken,  this  being  termed  the 
margin  of  safety.  It  is  evident  that  this  margin  will 
vary  in  a  direct  ratio  with  the  rate  of  income.  A  United 
States  Government  bond,  for  instance,  yields  less  than  2 
per  cent  to  the  investor,  a  state  bond  may  pay  4  per 
cent,  and  a  western  farm  mortgage  8  per  cent. 

Public  Securities. — Government  bonds  open  to  pur- 
chase have  the  advantage  of  safety,  but  the  rate  of  in- 
terest is  so  low  as  to  put  them  out  of  the  investment 
class  except  where  unconditional  security  is  a  prime  re- 
quisite. The  bonds  of  states  which  have  borne  a  good 
financial  reputation  are  comparatively  safe.  Municipal 
bonds  are  now  very  popular  investments,  yielding  3^ 
per  cent  to  5  per  cent  to  the  investor  and  at  the  present 
time  are  good  and  safe. 

Real  Estate  Securities. — Contrary  to  the  general 
opinion,  real  estate,  improved  or  unimproved,  is  often  a 
poor  investment.  Improved  property,  subject  to  taxes, 
depreciation,  repairs,  insurance,  etc.,  often  disappoints 
the  owner.  Real  estate  bought  to  lease  for  others  to 
build  upon  is  a  good,  but  necessarily  limited  form  of 
investment.  Farm  lands  in  the  middle  west  have  made 
fortunes  for  many  in  the  past  ten  years,  but  taken  year 
in  and  year  out  they  may  be  said  to  be  only  a  fair  in- 
vestment. Farm  mortgages  are  among  the  best  invest- 
ments for  safety,   convenience  and  rate  of  income  of 


BUSINESS     METHODS.  113 

any  line  offered  the  investor.  Such  investments  should 
be  passed  upon  by  competent  authority  as  to  their 
legality,  title  to  property  covered,  whether  first  or  sec- 
ond mortgage,  etc.  Certain  states  have  laws  so  framed 
that  foreclosure  is  difiicult  and  designed  to  protect  the 
debtor.  Loans  in  such  states  should  be  avoided  except 
under  exceptional  conditions. 

Building  and  Loan  Associations. — Speaking  from 
wide  experience  in  investments,  David  R.  Forgan  says: 

"One  of  the  worst  forms  of  investment  in  real  estate, 
in  my  opinion,  is  building  and  loan  associations.  They 
are  gotten  up  in  most  attractive  form  to  catch  the 
month's  savings  of  thrifty  people  with  moderate  in- 
comes. I  know  there  are  some  of  these  in  the  older 
parts  of  the  country  that  are  apparently  succesful,  but 
my  experience  of  them  in  the  west  leads  me  to  consider 
them  as  a  whole  almost  the  easiest  concerns  to  get 
your  money  into  and  the  hardest  to  get  it  out  that  I 
know.  Their  plan  seems  so  simple  that  anyone  can  un- 
derstand them;  nevertheless  one  of  my  friends  in  Chi- 
cago, who  is  a  thorough  accountant,  lost  the  savings  of 
years  in  a  building  and  loan  association  of  which  he 
himself  was  the  annual  auditor." 

Corporation  Bonds. — Bonds  of  corporations,  as  well 
as  other  securities  should  be  purchased  only  after  their 
safety  has  been  assured  by  actual  experience.  The  first 
issue,  particularly  of  railroad  bonds,  is  liable  to  contain 
some  "water,"  for  which  the  immediate  investor  will 
have  to  pay.  Money  should  not  be  invested  in  bonds  of 
any  enterprise,  as  those  operating  public  utilities,  until 
the  company  is  actually  earning  money  to  an  amount 
not  less  than  twice  that  required  to  pay  the  interest  on 
its  bonds.  The  reason  for  this  is  that  the  risk  of 
financing  an  enterprise  lies  with  the  buyers  of  bonds. 
In  case  of  success  get  but  5  per  cent  per  annum,  if  a 
failure  they  are  the  only  losers. 

Stocks. — There  are  two  main  differences  between 
bonds  and  stocks:  (1)  Bonds  are  a  lien  upon  property 
of  some  kind,  while  stocks  frequently  represent  nothing 
tangible  other  than  earning  capacity,  good  will  and  hope 
of  the  future;  (2)  bonds  bear  a  promise  to  pay  both 
principal  and  interest,  enforceable  at  law,  while  a  stock 


114  BUSINESS    MAWS    ENCYCLOPEDIA, 

promises  nothing,  the  stockholder  becoming  a  part  of 
the  company.  This  is  often  an*  advantage,  particularly 
to  a  young  business  man,  giving  him  a  chance  as  a 
stockholder  to  see  the  actual  workings  of  a  company, 
identify  himself  with  it  and  be  elegible  to  hold  office. 
This  is  of  particular  value  in  a  small  town,  as  it  often 
identifies  a  man  in  a  business  way,  strengthens  his 
credit  and  gains  favors  that  would  not  otherwise  be  ex- 
tended. 

Wildcat  Investments. — A  large  class  of  so-called  in- 
vestments are  constantly  being  offered  the  public,  such 
as  mining  stocks,  oil  stocks,  plantation  stocks,  etc. 
Some  of  these  are  actual  frauds,  some  partially  fraudu- 
lent, and  all  are  risky.  They  are  often  promoted  by 
men  having  no  means  of  their  own  and  even  if  success- 
ful are  so  managed  as  to  give  those  on  the  inside  the 
profits.  As  a  general  rule  rates  of  interest  greater  than 
6  per  cent  or  7  per  cent  involve  risks  putting  the  in- 
vestor in  the  speculator  class. 

SHORTHAND 

The  term  stenography  is  often  given  to  shorthand, 
being  used  synonymous  with  it,  John  Willis  in  1602 
publishing  a  treatise  entitled,  "The  Art  of  Stenography." 
Phonography,  tachygraphy  and  many  other  names  have 
been  or  now  are  designations  of  this  art. 

There  are  numerous  systems  of  shorthand,  probably 
upwards  of  two  hundred,  but  not  more  than  ten  of  prac- 
tical importance.  The  Pitmanic  systems  are  the  ones 
most  used,  others  not  having  the  following  of  these  sys- 
tems. There  are  three  editions  of  the  shorthand  of 
Isaac  Pitman,  differing  only  in  minor  characteristics. 
This  system  is  used  extensively  in  England  and  to  some 
extent  in  the  United  States.  The  Benn  Pitman  and 
the  Graham  system  are  both  extensively  used,  and 
are  very  closely  related,  Graham  using  more  devices  for 
increasing  speed  than  Pitman.  The  Munson  system  is 
used  by  a  large  number  of  shorthand  writers. 

The  systems  not  Pitmanic  vary  from  each  other  as 
well  as  from  Pitman  writing.  The  letters  of  the  Cross 
Electic  alphabet  upon  the  form  of  an  ellipse  and  there 


BUSINESS    METHODS.  115 

are  five  positions  instead  of  three.  The  Gregg  system 
is  written  on  the  slope  of  longhand,  has  no  position, 
and  joins  vowels  and  consonants. 

The  speed  at  which  shorthand  can  be  written  is  a 
much  discussed  subject.  The  ordinary  public  speaker 
uses  130  to  180  words  per  minute,  and  200  words  per 
minute  is  very  fast  writing  and  can  be  reached  by  few 
writers  for  any  length  of  time.  Commercial  speed 
ranges  from  80  to  100  words  per  minute.  Few  dictate 
120  words  per  minute. 

The  following  cut  gives,  in  the  Benn  Pitman  system 
as  in  common  use  in  the  United  States,  a  specimen  of 
shorthand  writing.  The  Graham  system — most  used  by 
court  reporters — is  very  similar  to  that  of  Benn  Pitman, 
but  uses  contractions  and  other  expedients  to  a  greater 
extent. 


.^S^-*) /JU>.__v-.  ^ 


r^^ 


Transcript  of  the  above  notes: 

"For  the  third  time  the  Congress  of  the  United 
States  are  assembled  to  commemorate  the  life  and  the 
death  of  a  president  slain  by  the  hand  of  an  assassin. 
The  attention  of  the  future  historian  will  be  attracted 
to  the  features  which  reappear  with  startling  sameness 
in  all  three  of  these  awful  crimes;  the  uselessness,  the 
utter  lack  of  consequence  of  the  act;  the  obscurity,  the 
insignificance  of  the  criminal;  the  blamelessness — so  far 
as  in  our  sphere  of  existence  the  best  of  men  may  be 
held  blameless — of  the  victim." 


116  BUSINESS    MAN'S    ENCYCLOPEDIA. 

MAIL  ORDER  BUSINESS  / 

There  are  two  main  divisions  in  the  mail  order  busi- 
ness; first,  as  carried  on  by  a  small  dealer  giving  it  his 
whole  attention;  second,  as  transacted  by  an  established 
house,  either  as  side  issue  to  assist  the  traveling  sales 
department,  or  as  in  case  of  Montgomery  Ward  &  Co. 
and  other  catalogue  houses,  as  a  sole  business. 

The  underlying  principles  of  the  business  are  the 
same  in  all  cases,  differing  only  in  application.  The 
requisites  for  a  successful  start  may  be  briefly  outlined 
and  if  conscientiously  followed  out  will  bring  a  degree 
of  success  depending  only  upon  the  extent  of  the  field 
and  the  closeness  of  the  application  of  the  promoter. 

Qualifications  Necessary. — First,  brain  is  of  impor- 
tance. The  average  beginner  should  employ  the  best 
brain  talent  procurable,  some  one  else's  if  not  his  own. 
For  the  building  of  a  permanent  business,  honesty  must 
be  an  asset  as  well  as  brain  power.  Houses  now  in  the 
field  to  stay  are  noted  for  the  honesty  with  which  they 
treat  all  dealing  with  them.  Sales  over  the  counter  may 
be  made  on  account  of  the  locality  of  the  store,  even 
though  the  goods  are  not  up  to  standard  and  the  pro- 
prietor considered  tricky,  but  a  customer  who  has  been 
victimized  by  mail  can  never  be  depended  on  for  an- 
other order. 

The  smaller  mail  order  journals  and  a  certain  class 
of  jobbers  as  well  as  some  mail  order  writers  hold 
forth  a  glowing  future  for  an  inexperienced  man  start- 
ing in  the  business  with  small  capital — as  one  writer 
terms  it,  **a  man  or  woman  of  average  intelligence,  with 
a  capital  of  fifty  dollars  in  cash,  no  experience,  and 
no  influential  friends,  can  start  in  business  and  spell 
success  in  capitals  at  the  end  of  one  year's  labor." 
Where  one  such  venture  launched  at  an  opportune  time 
by  someone  peculiarly  fitted  to  the  business,  comes  to 
success,  fifty  fail  for  lack  of  capital  and  as  many  more 
yield  indifferent  results.  Says  W.  B.  Powell  on  this 
subject:  "You  cannot  get  rich  on  a  three-line  ad  in  a 
mail  order  paper  filled  with  advertising  that  makes 
yours  look  like  thirty  cents.  The  mail  order  business 
has  gotten  down  to  hard-pan  basis.    You  have  to  have  a 


BU8INES8     METHODS.  117 

good  article  and  considerable  capital  back  of  you,  busi- 
ness sense,  and  a  tenacity  of  purpose  that  will  not  falter 
within  two  or  three  years.  You  cannot  get  rich  quick 
on  two  or  three  hundred  dollars.  If  you  could,  there 
wouldn't  be  white  paper  enough  to  print  the  ads  offered 
the  mail  order  publications."  A  beginner  should  have 
sufficient  capital — actual  money  in  the  bank — and  a  rea- 
sonable credit  to  tide  him  over  in  case  he  needs  money 
temporarily. 

Adaptability,  as  in  other  lines  of  business,  is  a  prime 
requisite.  A  business  suited  to  one's  taste  is  bound  to 
be  a  success  eventually,  and  if  not  suited  to  it  and  the 
promoter  cannot  adapt  himself  to  its  manifold  require- 
ments, he  should  lose  no  time  in  changing  to  one  in 
which  he  can  put  forth  his  full  energies. 

System. — The  advantage  of  system  in  the  mail  order 
business  is  fully  set  forth  by  Sydney  A.  Hale,  who  says: 
*'You  must  have  system  in  your  business,  and  the  best 
is  none  too  good.  In  no  other  business  is  the  routine 
and  detail  so  great;  in  no  other  business  is  a  most  ac- 
curate and  most  minute  record  of  every  transaction  so 
essential;  in  no  other  business  is  a  handy  record  so 
necessary.  A  good  system  is  not  necessarily  an  in- 
volved one;  on  the  contrary,  inasmuch  as  system  con- 
sists in  the  elimination  of  labor,  time  and  useless  de- 
tail, the  simplest  system  is  the  nearest  approach  to  per- 
fection. It  is  the  writer's  experience  that  no  one  stock 
system  can  ever  prove  adequate — only  a  system  devised 
essentially  and  especially  to  fill  your  own  particular 
needs.  Whether  it  fills  anybody  else's  need  is  not  your 
care;  unless  it  can  fill  your  own  needs  it  should  be 
abandoned.  A  successful  system  must  always  be  easy 
of  access;  it  must  be  accurate;  it  must  be  complete. 
Money  invested  in  perfecting  a  system  is  money  saved. 
Don't  try  to  start  business  or  life  without  them.  It  is 
the  man  that  has  a  system  in  both  life  and  business 
that  wins  the  battles." 

Advertising. — The  vital  part  of  a  mail  order  business 
once  started  is  the  advertising.  Proper  mediums  must 
be  used,  the  ads  must  be  well  worded,  displayed,  and 
placed;  advertising  effort  must  be  continuous. 

Promptness    in    Delivery. — Goods    advertised    should 


118  BUSINESS    MAN'S    ENCYCLOPEDIA, 

be  forwarded  the  buyer  as  soon  as  possible;  there 
should  be  no  waiting  on  account  goods  being  out  of 
stock  or  not  yet  delivered  from  the  manufacturer. 

Neatness. — Many  beginners  and  even  some  estab- 
lished firms  underrate  neatness  in  putting  out  goods. 
Goods  neatly  labeled,  mailed  in  a  compact  package  care- 
fully done  up,  appeal  to  the  recipient  at  once. 

Originality. — Originality  in  business  methods  and 
personality  in  conducting  a  business  are  always  at  a 
premium,  and  will  go  a  long  way  toward  bringing  suc- 
cess in  selling  by  mail. 

FIRE  INSURANCE  ADJUSTMENTS 

In  Case  of  Loss. — The  ordinary  business  does  not 
suffer  from  loss  by  fire  more  than  once  or  twice  in  a 
lifetime.  When  a  loss  comes,  he  should  be  prepared  to 
see  that  he  obtains  every  cent  rightfully  due  him. 
While  it  is  an  acknowledged  fact  that  more  losses  are 
overpaid  than  underpaid,  in  case  of  a  small  loss  it  is 
probably  as  satisfactory  a  way  to  trust  entirely  to 
the  fairness  of  the  adjuster.  In  case  of  a  large  or  total 
loss,  if  the  insured  shows  that  he  fully  comprehends 
how  the  amount  of  his  loss  is  being  determined,  he  will 
not  fail  to  receive  better  consideration  at  the  hands  of 
the  company's  representative.  If  not  satisfied  with  a 
loss,  as  adjusted,  it  is  best  to  let  it  go  to  arbitration. 

Rules  for  Determining  Property  Loss. — The  following 
rules  and  formulas  are  those  used  by  adjusters  in  ascer- 
taining the  extent  of  a  loss  on  stocks  or  personal  prop- 
erty, and  show  the  methods  adopted  by  them  in  such 
cases.  There  is  nothing  new  about  them,  and  they  are 
perfectly  familiar  to  everybody,  and  are  to  be  found 
in  any  arithmetic  used  in  the  common  schools  in  our 
land.  Every  school  boy  has  learned  them,  but  their 
application  to  the  adjustment  of  losses  may  be  some- 
thing that  those  who  may  not  have  had  experience  in 
this  particular  line  of  business  will  find  of  assistance. 
It  should  be  remembered  that  cost  to  the  assured  is 
the  basis  of  the  loss  sustained,  but  not  necessarily  the 
measure  of  the  damage  or  loss;  this  may  be  more  or 
less  according  to  the  circumstances  surrounding  each 


BUSINESS     METHODS,  119 

case,  and   is  undoubtedly  affected  by  depreciation  or 
increased  value. 

Value  of  Property. — The  question  of  values  was  for- 
merly one  that  perplexed  even  the  most  expert  adjust- 
ers, and  many  complications  have,  in  former  years, 
arisen  because  of  the  difference  of  opinions  relative  to 
the  value  of  merchandise  in  various  or  different  hands; 
but  for  many  years  the  rule  has  prevailed,  and  common 
custom  may  be  said  to  have  regulated  this  matter,  until 
at  the  present  time  it  is  generally  conceded  by  all  that 
the  question  of  value  depends  materially  and  almost 
entirely  upon  the  business  of  the  party  in  whose  pos- 
session the  merchandise  is  found.  The  insurance  con- 
tract contemplates  only  indemnifying  a  party  in  case 
of  fire  against  absolute  loss,  and  the  cost  to  him  is  the 
basis  of  the  estimate  of  the  loss.  In  the  case  of  a  manu- 
facturer the  basis  of  the  estimate  would  be  the  cost  of 
production.  If  the  merchandise  is  in  the  hands  of  a 
wholesale  dealer,  then  the  basis  of  the  estimate  would 
be  the  price  paid  the  manufacturer.  If  the  merchandise 
is  in  the  hands  of  a  retail  dealer  then  the  value  would 
be  increased,  and  the  basis  of  the  estimate  would  be  the 
price  paid  the  wholesale  dealer.  The  same  merchandise 
in  the  hands  of  the  consumer  would  be  enhanced  in 
value,  and  the  basis  of  the  estimate  would  be  the  retail 
dealer's  price. 

It  will  therefore  be  observed  that  the  same  merchan- 
dise in  various  hands  has  different  values,  and  in  deal- 
ing with  the  various  losses  that  it  may  have  four  values, 
according  to  the  business  the  party  is  engaged  in  who 
has  sustained  a  loss,  viz.:  manufacturers,  wholesale 
dealers,  retail  dealers  and  consumers. 

Definition  of  Terms. — The  following  terms  are  used 
in  adjustment  calculations  and  are  here  defined  for  easy 
reference : 
gross  cost.    The  entire  cost  of  merchandise,  including 

all  expenses,  etc. 
net  cost.    The  entire  cost  of  merchandise  after  all  de- 
ductions are  made. 
gross   purchases.     The    amount    of    merchandise    pur- 
chased at  gross  cost. 


120  BUSINESS     MAN'S    ENCYCLOPEDIA, 

net  purchases.  The  amount  of  merchandise  purchased 
excluding  freights,  etc. 

gross  stock.  The  amount  of  merchandise  on  hand,  val- 
ued at  gross  cost. 

net  stock.  The  amount  of  merchandise  on  hand,  valued 
at  net  cost. 

gross  sales.     The  amount  of  merchandise  sold. 

gross  inventory.  The  amount  of  merchandise  invoiced 
at  gross  cost. 

net  inventory.  The  amount  of  merchandise  invoiced  at 
net  cost. 

expense  account.  All  expenditures  incident  to  the  busi- 
ness. 

gross  profit.  The  entire  excess  of  pecuniary  value  re- 
ceived from  the  sale  of  merchandise,  over  its  cost. 

net  profit.  The  excess  of  pecuniary  value  received  from 
the  sale  of  merchandise  over  its  cost,  less  all  ex- 
penditures. 

loss.     The  difference  between  the  gross  cost  and  the 
prices  received. 
Purchases,  less  net  sales,  are  equal  to  the  stock  on 

hand. 

Purchases,  less  stock  on  hand,  are  equal  to  the  net 

sales. 

Purchases,  less  present  inventory,  added  to  the  gross 

profit,  are  equal  to  the  gross  sales. 

Net  sales,  and  stock  on  hand,  are  equal  to  the  amount 

of  net  purchases. 

Net  sales,  added  to  the  gross  profit,  are  equal  to  the 

amount  of  gross  sales. 

Gross  sales,  less  gross  profit,  are  equal  to  the  amouijt 

of  net  sales. 

Gross  sales,  less  gross  profit,  added  to  present  in- 
ventory, are  equal  to  the  amount  of  purchases. 

To  Ascertain  Cost. — When  the  amount  of  gross  sales 

and  rate  per  cent  of  gross  profit  are  given,  then  to  as- 
certain cost: 

Rule. — Divide  the  amount  of  sales  by  1  (one  dollar), 

plus  the  rate  per  cent  of  profit,  and  the  quotient  will  be 

the  net  cost   (this  is  simply  the  old  rule  to  ascertain 

present  value) ;  or  the  same  result  may  be  obtained  by 

dividing  the  amount  of  sales  by  the  aliquot  part  of  one 


BUSINESS     METHODS,  121 

hundred  representing  the  per  cent  of  profit,  and  the 
quotient  will  be  the  net  cost.  If  the  goods  are  sold  at  a 
loss,  then  to  ascertain  cost,  divide  the  amount  of  sales 
by  1  (one  dollar),  less  the  per  cent  of  loss,  and  the 
quotient  will  be  the  net  cost;  or  from  gross  sales,  de- 
duct gross  profits  and  the  remainder  will  be  the  net 
cost. 

To  Ascertain  Purchases. — When  the  amount  of  gross 
sales,  rate  per  cent  of  gross  profit,  and  net  inventory 
are  given,  to  ascertain  amount  of  purchases: 

Rule. — Divide  the  amount  of  sales  by  1  (one  dollar), 
plus  the  rate  per  cent  of  profit,  and  the  quotient  will  be 
the  amount  of  net  sales  (this  is  the  old  rule  for  ascer- 
taining present  value).  Add  net  sales  to  the  inventory, 
and  the  sum  will  be  net  purchases. 

To  Ascertain  Stock. — When  the  amount  of  gross 
sales,  net  purchases,  and  rate  per  cent  of  profit  are 
given,  then  to  ascertain  the  amount  of  stock  on  hand: 

Rule. — Divide  the  amount  of  sales  by  1  (one  dollar), 
plus  the  rate  per  cent  of  profit,  and  the  quotient  will  be 
the  net  sales.  Now,  subtract  the  amount  of  net  sales 
from  the  net  purchases,  and  the  remainder  will  be  net 
stock. 

To  Ascertain  Present  Value. — ^When  the  gross 
amount  of  sales  and  per  cent  of  profit  are  given,  then 
to  ascertain  net  sales  or  present  value: 

Rule. — Divide  the  value  stated  by  1  (one  dollar), 
plus  the  rate  per  cent  of  profit,  and  the  quotient  will  be 
present  value  or  the  net  amount  of  sales. 

Note. — You  can  never  arrive  at  the  correct  present 
value  or  the  amount  of  net  sales  by  multiplying  the 
gross  sales  by  the  rate  per  cent  of  profit,  and  deducting 
this  product  from  gross  sales. 

To  Ascertain  Sales. — When  net  purchases,  rate  per 
cent  of  gross  profit,  and  net  inventory  are  given,  to 
ascertain  gross  sales: 

Rule. — From  purchases  deduct  inventory,  the  differ- 
ence will  be  net  sales.  Multiply  net  sales  by  the  rate 
per  cent  of  profit,  the  product  will  be  profit  in  dollars 
and  cents,  which  added  to  net  sales,  will  give  the  gross 
Bales.  9 


122  BUSINESS     MAN'S   ENCYCLOPEDIA. 

To  Ascertain  Pep  Cent  of  Profit  or  Loss. — Given,  the 
gain  or  loss,  to  find  the  per  cent: 

Rule. — Take  the  difference  between  the  net  cost  and 
the  amount  received  from  the  sales,  and  divide  by  the 
gross  cost,  and  the  quotient  will  denote  per  cent  of 
profit  or  loss.  This  is  the  old  rule  of  dividing  the  gain 
or  loss  by  the  number  on  which  the  per  cent  is  reckoned 
to  ascertain  the  per  cent  of  profit  or  loss. 

To  Ascertain  Profit  or  Loss  in  Dollars  and  Cents. — 
Given  the  cost  and  per  cent  of  profit  or  loss: 

Rule. — Multiply  cost  by  per  cent  of  profit  or  loss, 
and  the  product  will  be  profit  or  loss.  Also  find  differ- 
ence between  net  cost  and  amount  received  from  sale 
of  merchandise. 

To  Ascertain  Per  Cent  of  Profit. — When  net  sales 
and  gross  profit  are  given: 

Rule. — Divide  the  amount  of  profit  by  the  amount  of 
sales,  and  the  quotient  will  be  per  cent  of  profit.  (This 
is  the  old  rule  of  dividing  the  gain  or  loss  by  the  num- 
ber on  which  per  cent  is  received  to  find  the  per  cent 
of  gain  or  loss.) 

To  Ascertain  Profit  in  Dollars  and  Cents. — When  the 
amount  of  net  sales  and  per  cent  of  profit  are  given: 

Rule. — Multiply  net  sales  by  per  cent  of  profit,  and 
the  product  will  be  profit.  Also  subtract  net  sales  from 
gross  sales. 

To  Ascertain  Per  Cent  of  Profit. — When  net  pur- 
chases, gross  sales,  and  inventory  are  given,  to  ascer- 
tain per  cent  of  profit: 

Rule. — Deduct  purchases  from  inventory,  and  the 
difference  will  be  net  sales.  Subtract  net  sales  from 
gross  sales,  and  the  remainder  will  be  gross  profit. 
Divide  gross  profit  by  net  sales,  and  the  quotient  will 
be  rate  per  cent  of  profit. 

To  Ascertain  Per  Cent  or  Proportion  of  Loss. — ^When 
the  total  loss,  total  insurance,  and  amount  of  each  policy 
are  given: 

Rule. — Divide  total  loss  by  total  Insurance,  and  the 
quotient  will  be  the  per  cent  or  proportion  of  loss,  then 
multiply  particular  insurance  by  per  cent  of  loss,  and 
the  product  will  be  particular  loss;  or,  to  use  the  Rules 


BUSINESS    METHODS.  123 

of  Proportion,  the  formula  would  be:  as  the  entire  in- 
surance is  to  the  entire  loss,  so  is  each  policy  to  its  pro- 
portion of  the  loss. 

To  Ascertain  Per  Cent  or  Proportion  of  Salvage. — 
When  total  salvage,  total  insurance,  and  amount  of  each 
policy  are  given: 

Rule. — Divide  the  total  salvage  by  the  total  insur- 
ance, and  the  quotient  will  be  the  per  cent  of  salvage. 
Multiply  particular  insurance  by  per  cent  of  salvage, 
and  the  product  will  be  particular  salvage:  or  to  use 
the  Rules  of  Proportion,  the  formula  would  be:  as  the 
total  insurance  is  to  the  total  salvage,  so  is  each  policy 
to  its  proportion  of  salvage. 

Rules  for  Ascertaining  Amount  of  Loss. — There  are 
several  methods  adopted  by  adjusters  to  ascertain  the 
amount  of  loss  on  stocks  of  merchandise,  the  general 
principles  involved  in  all  are  similar,  although  the 
means  adopted  to  arrive  at  the  result  differ  in  some 
respects.    Those  in  general  use  are  given  herewith: 

FIRST  METHOD. 

1.  From  inventory  or  statement  of  stock  on  hand 
at  given  date,  deduct  items  not  stock;  also,  items  not 
covered  by  the  policy. 

2.  From  remainder,  deduct  any  charges  included 
for  expenses,  freight  and  drayage,  and  the  remainder 
■will  be  net  inventory  or  stock. 

3.  To  net  inventory  or  stock,  add  purchases  from 
time  the  inventory  was  taken  to  date  of  fire,  and  the 
sum  will  be  total  net  stock. 

4.  From  total  net  stock  deduct  net  sales,  and  the 
remainder  will  be  the  amount  of  stock  on  hand  at  the 
time  of  the  fire. 

5.  From  stock  on  hand,  deduct  cost  value  of  mer- 
chandise saved  in  sound  and  damaged  condition,  and 
the  remainder  will  be  net  merchandise  loss. 

6.  From  merchandise  loss  deduct  value  of  commis- 
sion goods. 

7.  From  merchandise  loss  deduct  discount  on  time 
purchases  to  find  cash  cost. 

8.  From  cash  cost  deduct  for  depreciation  and 
waste,  to  find  present  value. 


124  BUSINE^^S     MAN'S     ENCYCLOPEDIA. 

9.  To  present  value  add  freight  and  expense  on  net 
loss,  to  give  gross  values. 

10.  To  gross  values,  add  damage  allowed  on  mer- 
chandise saved,  and  result  will  be  the  amount  of  the 
\oss. 

Note. — Exclude  freight  on  purchases,  sales  and  sal- 
vages, and  when  you  have  ascertained  actual  cost,  at 
first  hands  of  amount  destroyed,  add  freight.  This 
places  assured,  as  nearly  as  possible,  as  he  stood  pre- 
vious to  the  fire. 

SECOND  METHOD. 

The  following  may,  perhaps,  be  regarded  as  a  more 
concise  method,  and  one  easier  understood: 

First.  From  inventory,  or  statement  of  stock  on 
hand  at  a  given  date,  deduct  items  not  stock;  also,  items 
not  covered  by  the  policy. 

Second.  From  remainder,  deduct  all  items  included 
for  freight  and  other  expenses,  and  the  remainder  will 
be  net  inventory  or  stock. 

Third.  To  net  inventory,  or  stock,  add  net  pur- 
chases from  time  the  inventory  was  taken  to  date  of 
fire,  and  the  sum  will  be  the  total  net  stock. 

From  total  net  stock  deduct  the  following: 

1.  Gross  sales,  less  profit  agreed  upon. 

2.  Net  value  of  merchandise  saved  in  a  sound  or 
damaged  condition. 

3.  Depreciation  in  values. 

4.  Discounts  allowed  for  cash,  on  time  purchases. 

5.  Value  of  commission  goods. 

Then  to  the  remainder,  add  freight  and  expenses,  as 
well  as  the  damages  allowed  on  goods  saved,  and  the 
result  will  be  the  amount  of  the  loss. 

THIRD    METHOD. 

First.  Take  amount  of  net  inventory,  or  statement 
of  stock  on  hand,  at  a  given  time. 

Second.  To  this,  add  the  amount  of  purchases  from 
date  of  inventory  to  time  of  fire.  The  sum  thus  obtained 
will  be  the  amount  of  stock. 

Third.  Deduct  from  the  total  amount  of  stock,  cash 
and  credit  sales  from  date  of  inventory  to  time  of  fire, 


BU8INES8    METHODS.  125 

less  the  estimated  profits,  and  the  result  will  be  the 
stock  on  hand  at  time  of  fire.  From  this  should  be 
deducted  the  depreciation  in  value  agreed  upon  for 
stock  shopworn,  out  of  date,  etc.;  also,  value  of  mer- 
chandise used  in  or  by  assured's  family  or  other  par- 
ties, and  not  charged  in  account,  and  value  of  stock 
saved  in  good  order,  as  per  inventory  taken  since  the 
fire,  and  the  value  of  stock  saved  in  a  damaged  condi- 
tion, estimated  by  appraisers  as  sound;  also,  all  com- 
mission goods,  and  the  result  thus  obtained  will  be  the 
net  amount  of  the  loss. 

ADJUSTMENT     FORMULAS,     RETAIL     STOCKS     IN 
COUNTRY   STORES,    ETC. 

Adjusters  frequently  are  required  to  use  their  in- 
ventive faculties,  in  ascertaining  the  loss  in  country 
stores,  when,  after  a  fire,  it  is  found  that  all  books, 
papers,  invoices,  etc.,  have  been  destroyed.  In  such 
cases  the  following  formula  will  be  of  assistance: 

FIRST  METHOD. 

DEBITS. 

Capital  invested $ 

Present   indebtedness 

Ascertained  gross  profits 

CREDITS. 

Cash  on  hand  at  time  of  fire $ 

Investments  other  than  merchan- 
dise       

Expenses  paid 

Bills  and  accounts  receivable... 

Total $ 

The  balance  between  the  accounts  gives  the  amount 

of  merchandise  on  hand  at  the  time  of  the  fire,  from 

which  the  value  of  the  goods  saved  should  be  deducted 

to  ascertain  the  amount  of  the  loss. 

SECOND   METHOD. 
DEBITS. 

Total  purchases,  per  invoice $ 

Produce,  etc.,  per  ledger  accounts 

Cash  purchases  agreed  ujpon  (no  vouchers) 


126  BUSINESS     MAN'S     ENCYCLOPEDIA. 

CREDITS. 

Total  debits  as  above $ 

Less  capital  invested $ 

Less  present  indebtedness 


The  remainder  represents 
cash  from  sales  applied  to  pur- 
chases; to  this  add: 

Investments    $ 

Expenses  

Cash  on  hand 

Bills  receivable 

Book  accounts  receivable 

The  sum  of  these  credits  will  represent  the  cash 
sales,  which  are  reduced  by  the  per  cent  of  profit  to 
cost  basis  in  the  usual  manner,  and  the  stock  on  hand 
at  time  of  fire  is  readily  ascertained. 


COSTS 

Cost  of  Production. — ^Whether  taken  as  a  phase  of 
industrial  engineering  or  accounting,  the  determination 
of  the  cost  of  a  manufactured  product  is  of  great  im- 
portance. The  time  was  when  prices  were  set  by  guess- 
work or  what  seemed  to  be  the  price  yielding  a  fair 
profit,  but  that  time  is  now  past.  While  the  selling 
cost  is  dependent  upon  the  demand  and  supply,  the 
manufacturer,  not  being  able  to  regulate  or  forecast 
what  the  probable  demand  will  be,  must  know  what  the 
cost  of  his  product  is  to  him,  that  he  may  not  be  drawn 
into  running  his  plant  at  a  loss. 

Outline  of  the  Subject. — In  the  simplest  form  of 
manufacture  labor  and  material  are  the  two  prime  fac- 
tors of  cost.  When  manufacture  becomes  more  com- 
plicated, as  in  the  case  of  a  machine-shop  putting  out 
engines,  boilers,  etc.,  in  order  to  obtain  the  factors 
making  up  the  selling  price,  divisions  and  subdivisions 
must  be  made  until  the  prime  factors  are  reached. 
For  such  a  plant  as  mentioned^  the  following  would 
be  an  outline: 


BUSINESS    METHODS.  127 

SELLING  PRICE. 


Cost. —    I. 

Prime  Cost. 

1.    Labor  in  (a)  Machine  Shop;    (b) 

Foundry;  (c)  Drawing  Room. 

2.     Material. 

II. 

Fixed  Charges. 

1.    Insurance. 

2.    Depreciation. 

3.    Indirect  (Non-productive)  Labor. 

4.     Repairs. 

III. 

Selling  Expense. 

1.     Office. 

2.    Salesmen. 

3.     Traveling. 

4.    Advertising. 

5.    Estimating. 

(a)  General. 

(b)  Drawing  Room. 

Profit- 

Selling  Price. — Referring  to  the  foregoing  outline  it 
will  be  seen  tht  the  selling  price  is  made  up  of  two 
main  elements,  (1)  Cost  (to  make  and  sell — sometimes 
called  factory  cost)  and  profit.  The  selling  price  is 
not  fixed  by  cost,  but  by  demand  and  supply.  No  mat- 
ter how  cheaply  a  product  may  be  made,  if  there  is  no 
demand  it  can  not  find  a  sale.  If  producing  cost  is  so 
high  as  to  be  nearly  prohibitive,  the  demand  must  be 
strong  enough  to  pay  the  necessary  price.  This  condi- 
tion is  often  obscured  by  the  fact  that  many  manu- 
facturers regulate  their  prices  by  those  of  their  com- 
petitors. 

Cost. — By  cost,  as  used  above,  is  meant  all  those 
expenses  necessary  to  complete  the  product  and  place 
it  on  the  market — in  other  words — selling  price  less 
profit. 

Prime  Cost. — The  material  cost  and  labor  cost  of 
producing  an  article  by  manufacture  is  prime  cost. 

Labor. — The  labor  entering  into  prime  cost,  is 
direct  labor,  that  is,  the  worker  actually  produces  or 
aids  in  the  production  of  the  thing  made.  Direct  labor 
is  synonymous  with  non-productive  labor. 


128  BU8INE88    MAN'S    ENCYCLOPEDIA. 

Material. — That  which  is  used  in  the  manufacture  of 
an  industrial  product  is  termed  material. 

Fixed  Ciiarges. — This  term  is  a  general  one,  com- 
prehending those  elements  entering  into  cost  which 
are  an  expense  and  yet  not  directly  chargeable  through 
the  process  of  manufacture  to  the  finished  product. 
These  as  given  are:  (1)  Insurance;  (2)  depreciation; 
(3)  indirect  labor;    (4)  repairs. 

Insurance. — Expense  for  indemnity  against  loss  of 
any  kind  is  comprehended  in  the  term  insurance.  The 
most  common  form  is  insurance  against  fire,  but  almost 
any  possible  contingency  may  be  insured  against. 

Depreciation. — Depreciation  is  a  lessening  in  value 
from  age  and  contributory  causes.  Buildings,  machin- 
ery, etc.,  used  in  any  process  lose  in  value  by  wear, 
use,  introduction  of  new  processes,  and  many  other 
causes.  Only  the  land  on  which  a  factory  stands  com- 
monly appreciates  in  value,  and  such  appreciation  is 
commonly  not  reckoned  in  cost  computations. 

Indirect  Labor. — Labor  which  is  necessary  to  make 
direct  labor  effective,  though  not  of  itself  producing 
anything,  or  which  is  necessary  as  an  adjunct  to  direct 
labor  is  termed  indirect  labor. 

Repairs. — Various  operations  become  necessary  to 
restore  worn,  depreciated,  or  damaged  machines,  fix- 
tures or  buildings,  such  labor  or  material  used  being 
known  as  repairs  and  being  a  part  of  fixed  charges. 

Selling  Expense. — If  a  product  were  salable  at  the 
factory  door,  no  allowance  would  need  to  be  made  for 
expenses  necessary  to  make  a  sale.  Modern  commer- 
cial methods  necessitate  the  maintenance  of  an  office  or 
often  a  series  of  offices  to  arrange,  catalogue,  and  other- 
wise prepare  for  and  assist  in  the  sale  of  the  product 
of  the  factory  or  works.  Salesmen  must  be  employed 
to  dispose  of  the  output,  traveling  expense  must  be 
allowed  them  and  others  attending  to  necessary  busi- 
ness, and  various  charges  must  be  met  for  advertising. 

Estimates. — Estimates  fall  under  two  heads:  (1)  Gen- 
eral, as  those  drawn  up  for  a  concern  not  requiring 
special  machines;  (2)  drawing  room,  as  those  requiring 
the  special  work  of  designers  and  draftsmen.  If  ex- 
pensive drafts  and  patterns  are  made  for  use  in  the 


BUSINESS     METHODS,  129 

production  of  one  machine  and  are  actually  used  in  its 
manufacture,  this  machine  bears  the  expense  of  the 
patterns  made,  providing  they  are  of  no  further  use. 
If  they  may  be  of  use  in  future  work,  they  may  be 
figured  as  investment.  If  drawn  up  to  further  a  sale 
and  not  used,  selling  expense  is  charged. 

Profit. — From  a  technical  standpoint,  profit  is  not  a 
part  of  production  cost.  The  manufacturer  adds  to 
the  cost  to  him  such  per  cent  as  is  possible  for  him 
to  secure,  this  giving  the  selling  price  or  cost  to  con- 
sumer. 

Time-recording. — There  are  many  methods  of  record- 
ing the  time  of  employees,  the  most  common  being  the 
use  of  some  form  of  mechanical  device  imprinting  on 
an  individual  time-card  the  time  of  coming  and  going. 
From  these  the  time  book  or  pay  roll  is  made  up. 

Record  of  Time  on  Piecework. — To  apportion  cor- 
rectly the  time  spent  on  each  piece  of  work,  the  em- 
ploy§  is  provided  with  a  card  on  which  he  notes  the 
time  of  beginning  and  finishing,  this  time  being  charged 
against  the  particular  job  on  which  he  was  at  work. 

Analysis  of  Wages. — The  individual  time  cards  being 
turned  in  and  charged  against  the  proper  jobs,  the  total 
of  these  cards  will  agree  with  the  amount  of  weekly 
wages  paid  and  will  serve  as  an  exact  guide  to  the 
amount  of  work  required  upon  all  similar  processes. 
This  record  can  be  as  minute  as  desired,  embodying  a 
record  for  each  separate  process,  branch  of  manufac- 
ture, works  order  or  stock  number  to  which  the  items 
may  be  charged,  cross  columns  indicating  the  different 
classes  or  even  individual  workmen  employed* 

Stores. — There  should  be  a  system  for  the  accurate 
recording  of  all  transactions  affecting  stores.  In  a  fac- 
tory having  several  sections  or  branches  each  having 
a  separate  stores  department  a  requisition  should  issue 
from  the  head  of  each  department  to  the  head  oflice 
for  such  stores  as  will  probably  be  necessary  in  the 
course  of  manufacture.  The  requisition  should  show: 
(1)  Description  of  material  or  article;  (2)  quantity; 
(3)  use  designed  for;  (4)  time  required;  (5)  last  supply 
furnished  ;   (6)  by  whom  supplied;    (7)  remarks. 

If  cost  accounts  are  kept  for  each  works,  separate 


130  BUSINESS    MAN'S    ENCYCLOPEDIA, 

invoices  should  be  required  for  each  division,  but  one 
is  necessary  where  the  account  is  kept  at  the  head 
office. 

Issue  of  Stores. — ^Duplicate  orders  consecutively 
numbered  and  made  out  by  the  foreman  or  manager 
of  the  department  requiring  stores  are  required  before 
such  stores  are  issued.  When  issued,  the  issue  is  veri- 
fied by  the  signature  of  the  one  ordering  the  goods. 
An  exact  record  of  stores  on  hand  should  be  kept  at  all 
times  or  made  up  for  reports  at  a  specified  time.  A 
periodical  analysis  covering  the  same  time  as  the  wage 
analysis  should  be  prepared,  unless  the  requisitions 
themselves  are  turned  over  to  the  head  office  for  the 
finding  of  prime  cost  data. 

Work  Orders  and  Stock  Orders. — In  large  manufac- 
turing plants  no  general  expenditure  of  above  a  certain 
sum,  as  $100,  should  be  made  without  the  authority  of 
the  manager  to  be  evidenced  by  a  work  order  bearing 
an  estimate  and  authorization. 

In  factories  manufacturing  such  articles  as  carriages, 
furniture  or  similar  smaller  articles  for  stock,  a  stock 
order  should  be  issued  for  the  making,  to  determine 
the  cost  of  the  article  or  articles  manufactured  and 
all  expenditures  should  be  charged  against  this  stock 
order  number. 

In  continuous  process  factories  as  a  sugar  factory, 
an  arbitrary  subdivision  is  generally  made  and  charges 
made  against  such  subdivision. 

Disposition  of  Scrap. — To  obtain  a  fair  price  at  which 
sorap  is  to  be  rated,  a  standard  should  be  fixed  for  usual 
classes  of  material  and  changed  only  to  conform  to 
market  values. 

Fuel. — Where  coal  or  other  fuel  is  bought  in  bulk 
a  record  showing  how  it  is  distributed  is  kept  and  the 
proper  charge  made  against  each  division  of  the  fac- 
tory. 

Systems  in  Use. — There  are  a  large  variety  of  sys- 
tems of  finding  and  recording  costs  in  use,  simple  or 
complex,  depending  upon  the  size  of  the  factory  or 
works  and  complexity  of  the  process  employed.  The 
finding  of  costs  is  not  an  exact  science,  as  it  depends 
for  a  part  of  its  data  upon  inexact  information,  while 


BU8INES8    METHODS,  131 

accounting  authorities  differ  as  to  the  correct  disposal 
of  many  charges  and  credits.  Every  manufacturer 
should  consider  some  system  essential  to  a  correct 
administration  of  affairs. 

WINDOW  DRESSING 

The  fact  that  the  sale  of  merchandise  is  furthered 
by  a  display  of  some  sort  or  other  has  always  been 
recognized,  but  the  application  of  art  to  window  dress- 
ing and  the  recognition  of  this  work  as  governed  by  the 
rules  of  publicity  and  design  is  comparatively  recent. 
In  1890  there  were  but  twelve  professional  window 
dressers  in  the  United  States,  while  there  are  now 
probably  twelve  hundred,  besides  thousands  of  clerks 
and  proprietors  who  spend  a  portion  of  their  time  get- 
ting up  a  window  display. 

The  Window. — To  permit  of  dressing  to  advantage 
the  window  should  be  large  and  have  a  base  which 
extends  some  distance  back  in  the  store  and  should 
be  set  off  from  the  store  by  a  background,  to  concen- 
trate the  attention  of  the  passers-by  on  the  window 
and  not  distract  them  by  anything  beyond. 

Background. — In  dressing  a  window  the  first  thing 
to  be  planned  is  the  background,  which  must  be  in 
keeping  with  the  display,  bringing  it  out  and  empha- 
sizing the  parts  of  which  it  is  made  up.  The  test  of 
a  background  is,  **Does  it  bring  out  the  articles  shown 
in  strong  relief,  and  harmonize  with  them  in  tone?" 
A  background  may  harmonize  with  a  display  either  by 
hlend  or  contrast,  the  former  being  the  more  pleasing, 
the  latter,  however,  having  the  advantage  of  being  more 
noticeable  and  hence  more  likely  to  attract  attention. 
The  harmonious  effect  of  a  display  is  the  same  as  in  a 
painting  and  should  be  governed  by  the  same  rules. 
Displays  of  velvets,  plushes,  rugs,  etc.,  naturally  take 
to  harmony  by  blend,  while  a  display  calling  for  ob- 
servance of  detail  would  call  for  harmony  by  contrast. 
A  background  when  properly  managed  does  not  detract 
attention  from  the  goods  displayed,  but  directs  atten- 
tion to  them,  which  is  the  result  aimed  at. 

Light. — It  is  impossible  to  overestimate  the  impor- 
tance of  proper  lighting  in  window  displays.     No  mat- 


132  BUSINESS     MAN'S     ENCYCLOPEDIA. 

ter  how  careful  the  arrangement  or  harmonious  the 
coloring,  the  work  of  the  dresser  is  wasted,  unless 
properly  lighted.  An  ordinary  gas  light  in  the  center 
of  a  window  is  bad,  as  it  intervenes  between  the  eye 
and  the  objects  shown,  dazzling  rather  than  illumina- 
ting. 

All  properly  constructed  windows  have  a  group  of 
several  burners  at  the  top  and  in  front  of  the  window, 
with  a  large  reflector  so  arranged  as  to  throw  the 
rays  of  light  backward  and  downward  and  concentrate 
them  upon  the  display.  No  other  arrangement  of  light 
is  equally  satisfactory. 

At  night  the  window  shades  should  be  drawn  to  a 
point  within  about  four  feet  of  the  bottom  of  the  win- 
dows, so  that  the  only  light  that  can  be  seen  is  re- 
flected light.  This  makes  the  upper  part  of  the  window 
very  dark  and  intensifies  the  light  at  the  lower  part, 
giving  a  more  brilliant  display. 

Calors  Affected  by  Light.— The  effect  of  the  light 
used  in  a  window — whether  gas,  electricity,  kerosene, 
etc. — on  colors  should  be  carefully  noted  and  observed. 
For  instance,  gas  light  will  rob  certain  colors,  as  purple, 
lilac,  dark  blue,  violet,  and  green,  of  their  brilliancy. 
Displays  having  a  harmonious  color  effect  in  the  day- 
time may  look  garish  and  flashy  by  artificial  light. 

Color  Blending. — Color  is  by  far  the  most  obvious 
means  for  attracting  the  eye,  and  the  window  dressed 
in  colors  secures  the  attention  of  the  passer-by  at 
once,  far  more  readily  than  any  mere  ingenious  ar- 
rangement in  which  color  is  absent.  Good  color  effects 
are  diflftcult  to  obtain  where  goods  of  a  variety  of  colors 
are  used,  and  good  taste  seems  to  prefer  the  use  of  but 
two  or  three  colors  complimentary  to  each  other,  and 
as  a  rule  grouped  in  large  masses. 

Where  the  primary  purpose  is  to  display  as  many 
goods  as  possible  without  much  regard  for  color-effect 
or  harmonious  agreement,  it  is  advantageous  to  dress 
the  window  close  up  to  the  front,  and  fill  it  full  enough 
to  entirely  cover  the  space.  Where  color  and  form 
are  to  be  considered,  fewer  articles  may  be  used;  they 
may  be  more  widely  spaced,  and  should  be  placed  fur- 
ther back. 


BUSINESS    METHODS.  133 

Loose  plush  coverings  of  a  color  to  harmonize  with 
the  general  color  scheme  are  often  used  for  the  bottom 
of  windows.  This  permits  drapery  over  small  boxes  or 
stands,  the  elevations  and  waved  lines  so  produced  add- 
ing greatly  to  the  effect  of  the  goods  displayed. 

Objects  of  Window-Dresslng. — A  window  should  be 
decorated  keeping  in  mind  three  principal  objects:  First, 
to  serve  as  an  index  to  the  class  of  goods  kept  in  the 
store;  second,  to  attract  the  attention  of  people  to  the 
store;  third,  to  show  goods  which  will  excite  in  the 
people  the  desire  of  possession — these  rules  being  in 
fact  similar  to  the  rules  governing  all  publicity. 

Special  Features. — Besides  the  conventional  dressing 
usually  given  a  window,  showing  goods  carried  by  the 
store  making  the  display,  special  features  are  often  re- 
sorted to,  sometimes  bearing  some  relation  to  the 
stock,  and  sometimes  not.  It  seems  to  be  an  axiom 
with  window  dressers  that  something  moving  will  at- 
tract a  crowd  and  this  idea  is  carried  out  by  means  of 
animals,  mechanical  toys  or  effects,  persons  performing 
some  operation  or  process,  etc.  Particularly  good  spe- 
cial features,  as  now  used,  are:  A  typewriter  working 
automatically,  the  keys  being  depressed  by  means  of  an 
electrical  connection;  an  exhibition  of  oriental  rug 
weaving  by  a  native  in  costume;  an  automatic  candy- 
pulling  machine,  and  others  along  the  same  line,  par- 
ticularly when  directly  advertising  the  thing  to  be  sold. 
Whether  incomprehensibility,  when  resorted  to,  aids  or 
detracts  from  a  display,  is  a  mooted  point  among  au- 
thorities. A  cage  of  monkeys  in  the  window  of  a  hard- 
ware store  might  draw  a  large  crowd,  but  whether  it 
would  aid  trade  appreciably  in  the  long  run  is  open  to 
discussion. 

Distinctive  Displays. — One  phase  of  special  features 
given  more  attention  than  formerly  is  in  the  matter  of 
having  displays  distinctive.  The  blue  penciled  cards  of 
Tom  Murray,  marking  every  window  display  of  his 
store,  have  become  classic  in  advertising  circles.  A 
Madison  street  clothier  letters  a  daily  talk  on  his  win- 
dows, both  the  language  and  the  lettering  being  char- 
acteristic. 


134  BUSINESS    MAN'S    ENCYCLOPEDIA. 

Appropriateness  of  Displays. — To  secure  the  best 
possible  results  the  trimmer  should  constantly  keep  in 
mind  the  appropriateness  of  his  daily  display  to  the 
public.  The  class  of  people  passing  daily,  the  proba- 
bility of  drawing  others  by  his  store  to  view  his  dis- 
play, the  need  of  novelty,  change  and  distinctive  touch 
in  his  word,  and  an  observance  of  the  rules  of  art  as 
well  as  the  well-known  rules  of  advertising  will  all 
aid  in  augmenting  the  returns  from  his  displays. 

SIGNS 

The  use  of  signs  to  call  attention  to  or  designate  a 
business,  forms  an  important  portion  of  publicity.  There 
are  two  classes  of  signs — permanent  signs,  as  a  firm 
name  placed  over  a  door  or  on  a  building,  and  tempo- 
rary signs,  as  one  noting  the  fact  that  a  place  has 
changed  hands. 

Requisites  of  a  Good  Sign. — There  are  three  primary 
requisites  of  a  good  sign.  First,  a  sign  should  not  be 
overcrowded  with  words,  but  should  be  as  concise  and 
comprehensive  as  the  nature  of  the  case  will  allow. 
Many  signs  are  stultified  by  this  fact  alone,  as  people 
have  neither  the  time  nor  the  inclination  to  stop  to  read 
a  sign  having  too  much  matter  upon  it.  Second,  the 
letters  themselves  should  not  be  crowded.  Third,  the 
letters  used  should  be  of  such  a  character  as  to  be 
easily  read  by  anyone. 

Permanent  Signs. — The  sign  bearing  the  firm  name 
or  an  equivalent  is  of  primary  importance  and  calls  for 
a  suitable  location  and  easily  read  lettering.  A  com- 
mon form  of  this  sign  is  a  board  sign  over  an  entrance, 
the  lettering  being  in  Roman  caps,  the  letters  gilded 
or  silvered  and  having  an  iridescent  background,  made 
by  sifting  on  sand  or  ground  glass  while  the  paint  is 
fresh.  Projecting  signs  extending  perpendicularly  from 
a  building  and  extending  over  the  sidewalk  are  very 
effective.  Such  signs  usually  bear  letters  in  relief  and 
often  are  illuminated. 

Signs  are  illuminated  in  various  ways.  A  simple 
and  at  the  same  time  effective  way  is  by  having  a  row 
of  electric  lights  so  disposed  along  the  upper  edge  of 
a  sign  as  to  illuminate  the  entire  sign  by  means  of  a 


BUSINESS    METHODS.  135 

box  reflector.  The  most  common  and  probably  the  most 
effective  illuminated  sign  is  the  sign  bearing  electric 
lights — either  continuous  or  intermittent — upon  the  face 
of  the  letters.  A  sign  projected  several  inches  from 
the  face  of  a  building  and  having  small  holes  bored 
close  together  around  the  outline  of  the  letters  may  be 
illuminated  by  means  of  incandescent  lights  between 
it  and  the  building. 

Window  Signs. — A  form  of  sign  in  common  use  in 
windows  is  made  by  lettering  in  gold  or  silver  the 
wording  or  design  on  the  inside  of  the  glass,  the  design 
being  well  backed  with  varnish  to  insure  permanency. 
Metal  letters  make  very  serviceable  signs.  These  may 
be  classified  into  two  divisions,  those  fixed  outside  a 
window  or  sign,  and  those  fixed  inside,  or  concave  and 
convex.  Solid  copper  and  brass  letters  have  been  much 
used  for  outside  application  and  are  of  good  appear- 
ance, but  possess  the  drawback  of  requiring  daily  clean- 
ing. Concave  letters  are  generally  of  stamped  copper 
with  the  inside  face  gilded  and  fixed  against  the  inside 
of  the  window.  It  is  usual  to  outline  in  black  the 
letters  on  the  window  a  trifle  larger  than  metal.  When 
the  paint  dries  the  lip  of  the  metal  letter  is  cemented 
over  the  painted  one  on  the  window,  the  face  side  then 
showing  a  black  outline  with  a  concave  gilded  letter. 
White  enamel  letters  are  very  serviceable  and  require 
little  attention,  being  fixed  to  the  outside  of  the  glass. 

Relief  Signs, — Large  wooden  letters  are  often  braced 
from  the  tops  of  buildings  so  as  to  stand  out  in  relief 
against  the  sky.  They  are  of  simple  construction  and 
often  eight  to  ten  feet  in  height,  though  appearing 
much  smaller  from  the  ground.  They  stand  perpendicu- 
larly  from  the  edge  of  the  roof  and  are  braced  and 
wired  to  stand  the  most  violent  storm.  A  thin  sheet 
metal  letter  is  often  used  displayed  upon  a  screen  for 
a  relief  sign.  Large  signs,  readable  a  great  distance 
away,  are  fastened  to  a  large  gas  pipe  frame  and  are 
a  very  striking  form  of  advertisement. 

Temporary  Signs. — Included  in  this  class  are  all 
signs  designed  to  be  used  for  a  limited  time.  They  are 
made  in  almost  endless  variety,  both  in  the  window  ta 
call  attention  to  or  aid  in  the  display,  or,  inside  the 


136  BUSINESS     MAWS     ENCYCLOPEDIA. 

store  to  emphasize  the  policy  of  the  firm  or  to  call  at- 
tention to  the  goods.  These  may  be  made  distinctive 
and  the  best  advertising,  as  already  mentioned  under 
window  dressing.  Price  tickets  are  used  by  all  the 
popular  stores  and  by  many  catering  only  to  the  exclu- 
sive. 

Outside  temporary  signs,  usually  used  in  noting 
closing-out  sales,  removals,  auctions,  etc.,  are  usually  of 
stout  cotton  cloth  stretched  across  the  entire  front  of 
the  store,  though  enameled  oil  cloth  or  even  Manila 
pattern  paper  is  used. 

A  form  of  temporary  sign  only  within  the  reach  of 
the  largest  dealers  and  then  only  at  certain  times,  is 
obtained  by  the  use  of  dead-wall  space,  during  building 
operations,  the  cost  of  such  displays  amounting  to  sev- 
eral thousand  dollars  per  sign. 

Quality  of  Signs. — In  having  a  sign  made  the  mer- 
chant should  secure  the  best  possible  materials  to 
economize  in  wear  and  repairs,  a  competent  workman 
to  produce  an  artistic  sign,  and  should  study  to  have 
his  sign  characteristic  of  his  business  and  in  keeping 
with  it.  So  made  and  displayed  with  judgment  a  sign 
will  be  found  one  of  the  best  means  of  securing  pub- 
licity. 

ADVERTISING 

The  importance  of  advertising  for  every  class  of 
business  needs  no  extended  argument.  Advertising  mat- 
ter occupies  relatively  the  same  place  in  business  econ- 
omy as  a  sales  force,  the  purpose  of  both  being  to  make 
a  sale.  A  direct  sale  is  one  coming  directly  from  an 
advertisement,  as  an  order  for  a  book  from  one  who 
has  seen  the  advertisement  in  a  paper,  or  indirect,  as 
a  sale  made  of  a  proprietary  article  because  of  adver- 
tising displayed  on  a  billboard,  so  creating  a  demand 
for  the  article  or  turning  a  demand  already  created 
toward  it. 

Mediums. — The  character  of  advertising  varies  with 
the  article  offered  for  sale,  and  such  medium  is  used  as 
will,  in  the  judgment  of  the  advertiser,  produce  results. 

General  advertising  is  conducted  through  a  variety 
of   publications,    street-cars,    billboards,    etc.,    with   the 


BUSINESS     METHODS.  13T 

idea  of  creating  a  call  for  the  advertised  article  from, 
the  various  dealers  throughout  the  territory  covered. 

Local  advertising  is  conducted  through  the  newspa- 
pers, assisted  by  street-car  and  billboard  advertise- 
ments, and  often  supplemented  by  the  distribution  of 
circulars  or  the  mailing  of  letters  to  buyers  in  a  lim- 
ited territory. 

Mail  order  advertising  originally  was  conducted  in. 
a  class  of  publications  known  as  "mail-order  month- 
lies," as  those  published  in  Augusta,  Maine, — papers, 
designated  to  circulate  in  the  rural  districts,  cheaply^ 
compiled  and  printed,  and  sold  at  a  low  subscription- 
price.  These  papers  still  have  a  large  circulation  and 
are  used  for  mail-order  advertising;  but  practically  alii 
the  high-class  publications,  particularly  those  of  a  gen- 
eral nature,  carry  a  large  percentage  of  ads  now  classed, 
as  mail-order  advertising. 

Kinds  of  Ads. — Advertisements  may  have  numerouSn 
classifications  as  to  form,  from  the  announcement  ad 
affected  by  many  clothiers,  to  the  blanket  ad  of  the  de- 
partment stores.  A  common  and  increasing  class  of 
ads  may  be  embraced  in  the  term  "freak  ads."  Nearly 
every  manufacturer  and  promoter  puts  a  freak  ad  on. 
the  market  at  one  time  or  the  other,  some  being  unquali- 
fied successes.  The  present  fashion  in  this  class  of 
ads  is  to  leave  the  reader  in  doubt  as  to  part  of  the 
wording,  which  is  afterwards  supplied.  A  familiar  ad  of 
this  class  was  the  one  asking  "What  did  the  Woggle-bug: 
say?"  displayed  in  the  newspapers  and  on  billboards, 
and  after  a  week's  time  being  merged  into  a  newspaper 
and  book  advertisement. 

Object  of  an  Ad. — The  real  object  of  all  advertising 
is  to  sell.  No  matter  what  other  virtues  an  ad  may 
have,  if  it  does  not  sell  goods — sell  enough  to  make  it 
profitable — it  is  a  failure.  Attention  attracted  is  of 
value,  but  attention  to  the  point  of  buying  is  the  only 
thing  that  counts. 

Results. — The  results  of  mail  order  advertising  may 
be  shown  by  keying  ads,  there  being  several  methods. 
Some  firms  use,  "Dept.  A"  for  one  periodical,  "Dept.  B'* 
for  another,  and  so  on.  Others  change  the  firm  name„ 
or  a  portion   of  it,  as  "Chas.  A.  Ransom,"  "Chas.  B. 


138  BU8INES8    MAWS     ENCYCLOPEDIA. 

Ransom,"  etc.  A  common  key  is  a  variation  of  the 
street  number,  building  number,  building  name,  etc. 
Ads  occupying  a  page — and  sometimes  a  smaller  space 
— often  bear  a  tag  to  be  filled  out  and  forwarded.  These 
bear  a  key-word  or  number  and  are  an  exact  index  to 
the  pulling  power  of  a  medium.  Many  concerns  re- 
quest inquirers  to  ask  for  a  special  folder,  booklet  or 
catalog  and  judge  of  the  value  of  a  medium  by  the 
replies  containing  that  particular  request. 

To  judge  exactly  of  the  value  of  general  or  local 
advertising  is  not  an  easy  matter.  A  method  to  be 
recommended  is  as  follows:  Take  two  equally  good 
values — give  them  the  same  space  in  each  of  the  daily 
papers.  Have  both  ads  written  up  in  the  same  vein — 
have  both  illustrated  with  the  article  advertised,  and 
take  very  good  care  that  both  things  advertised  are  of 
equal  value.  Then  tabulate  the  results.  Later  on  in  the 
week  advertise  the  same  article  in  the  two  dailies,  only 
transpose  the  ads.  Tabulate  the  results  and  compare. 
Do  the  same  with  the  weekly  papers,  and  so  determine 
the  relative  values  of  the  different  mediums. 

Wording. — To  write  a  good  ad,  say  in  brief  what  you 
have  to  sell  and  why  people  should  buy  it.  Use  concise 
wording,  the  language  of  the  common  people;  let  the 
words  be  short.  Short  words  economize  space,  are 
easily  understood  and  enforce  and  drive  home  the  truths 
the  writer  wishes  to  convey. 

Force  should  be  combined  with  two  other  qualities, 
grace  and  versatility.  The  ad  stands  in  the  position 
of  a  salesman  and  should  present  the  subject  forcefully, 
easily,  and  in  a  manner  peculiar  to  itself.  In  consid- 
ering the  choice  of  words,  remember  the  methods  used 
by  the  good  salesman  or  the  good  business  man  and 
apply  them. 

Prices. — In  general  advertising,  prices  are  of  prime 
importance;  in  retail  advertising,  they  are  absolutely 
essential.  The  object  of  an  advertisement  being  to  sell 
goods,  the  advertisement  must  answer  those  questions 
liable  to  come  into  the  mind  of  the  reader,  and  the  ques- 
tion of  price  is  always  an  important  one.  First,  give 
the  introduction,  so  worded  as  to  attract  the  attention, 
next  the  talk  concerning  the  goods — concise  and  inter- 


BUSINESS    METHODS.  139 

esting — and  finally  give  the  price  in  unmistakable 
terms.  This  does  not  apply  to  very  high-priced  goods, 
or  goods  intended  only  for  exclusive  trade.  Such  goods 
generally  sell  regardless  of  exact  price. 

Display. — An  advertisement  must  be  different  and 
look  different  than  other  ads  if  it  is  to  be  fully  effective. 
This  is  accomplished  by  a  different  display.  By  dis- 
play is  meant  the  arrangement  of  the  type  used  so  as  to 
give  prominence  to  certain  parts  of  an  ad.  It  is  really 
ihe  contrast  between  the  dark  and  the  light  portions. 
When  originating  a  poster  or  other  work  in  which  vari- 
ous colors  may  be  used,  contrast  may  be  brought  out 
by  the  use  of  different  colors  for  different  parts,  as  a 
catch-line  in  red  and  the  body  in  dark  blue.  But  the 
adwriter  for  newspaper  work  must  limit  himself  to 
blacks  and  whites,  and  intermediate  grays — and  so  dis- 
tribute them  as  to  produce  an  effective  result. 

Preparation  of  Advertising  Copy. — The  rough  draft 
of  an  ad  is  usually  laid  out  about  three  times  larger 
than  it  is  to  appear  in  print.  It  is  always  well  to  make 
a  penciled  lay-out  in  the  rough,  conveying  the  general 
effect  the  ad  is  to  have  when  complete.  The  illustra- 
tion on  page  140  shows  a  rough  draft,  the  prelimi- 
nary idea — the  details  being  worked  out  later.  The 
general  scheme  of  this  blocking  out  would  be:  First, 
heavy  border  separating  the  ad  from  the  gray  of  the 
page,  framing  it  away  from  adjoining  matter;  second, 
the  heavy  mass  effect  of  the  headline  and  footline; 
third,  the  gray  of  the  body.  To  avoid  an  even  effect 
and  give  a  distinctive  finish  to  the  balance,  the  headline 
and  body  are  not  margined  the  same.  There  is  plenty 
of  white  space  to  balance  the  heavy  blacks  of  the  bor- 
der and  head,  and  footlines. 

Importance  of  the  Rough  Draft. — Even  the  most  ex- 
perienced advertising  man  will  find  the  rough  sketch  of 
the  utmost  importance  in  giving  him  the  idea  of  what 
is  to  follow.  If  this  sketch  is  correctly  laid  out  and 
balanced,  the  writing  of  the  advertisement  becomes  a 
very  simple  matter,  as  it  is  easy  to  take  up  the  ad, 
line  by  line  and  part  by  part,  completing  each  in  logical 
order  so  as  to  evolve  a  harmonious  and  effective  whole. 

Second  Rough  Draft. — In  working  out  the  details  of 


140  BUSINESS     MAN'S     ENCYCLOPEDIA. 


BUSINESS    METHODS.  141 

an  ad  the  writer  takes  liis  first  sketch,  and  duplicating 
the  border  on  another  sheet,  fills  in  the  display  head 
and  catch-lines  in  approximately  the  same  size  as  the 
type  to  be  used.  This  may  be  done  roughly  and  if 
occasion  demands,  in  rapid  sketchy  strokes,  so  as  to  be 
quickly  completed.  Accuracy  of  lettering  or  fineness  of 
effect  need  not  be  especially  sought  after,  as  long  as 
the  lettering  and  writing  is  legible  and  the  spelling, 
capitalization,  and  punctuation  accurately  and  clearly 
indicated.  Unimportant  errors  will  be  seen  and  cor- 
rected, either  by  the  compositor  in  setting  or  the  proof- 
reader in  reading  the  ad. 

In  the  lettered  rough  draft  shown  on  page  142, 
representing  the  second  stage  in  the  writing  of  a  rail- 
road ad,  the  first  three  lines  constituting  the  main  catch- 
line  are  first  drawn.  The  second  catch-line,  "South- 
western R.  R.,"  will  usually  be  a  "stock"  catch-line,  that 
is  a  line  used  as  a  sort  of  trade  mark,  and  varying  only 
in  size — never  in  lettering — on  all  the  stationery  and 
advertising  matter  of  the  road.  If  this  is  the  case,  it 
simplifies  the  writing  that  much,  as  it  has  only  to  be 
indicated  and  the  cut  supplied,  besides  it  aids  the  writer 
in  knowing  how  the  display  will  look.  The  display  type 
is  lettered  in,  the  body  is  proportioned  as  desired,  the 
words  are  given  plenty  of  room  on  the  page  and  the 
ad  is  ready  for  the  compositor. 

Indicating  Types  to  Be  Used. — Whether  or  not  to 
Indicate  the  style  of  type  and  kind  of  border  to  be  used 
depends  upon  circumstances.  Usually — and  particularly 
when  indicated  as  in  the  lettered-in  draft  just  mentioned 
— it  is  best  to  trust  to  the  judgment  of  the  compositor. 
Type-setters  doing  the  composition  on  ads  should  be, 
and  in  the  best  offices  are,  men  possessing  considerable 
practical  artistic  ability  as  well  as  mechanical  dex- 
terity and  have  little  or  no  need  of  any  other  informa- 
tion than  shown  by  copy  correctly  blocked  out.  When 
copy  is  sent  to  an  office  where  a  firm  has  not  done 
business  or  when  an  ad  embodying  any  peculiar  fea 
tures  is  required,  border  and  types  might  well  be  indi- 
cated. This  is  done  by  writing  the  name  and  size  on 
the  margin  opposite  the  matter  to  be  so  set,  and  con- 
necting the  two  by  a  Wne.  as  in  proof-reading. 


142 


BU8INES8    MAN'S    ENCYCLOPEDIA. 


SEORTESTilllffi- 

3E3T  TIMES 
St.  LOUIS 

«/»^^  St.  J5yu^,7^.  0/fe. 


"ttUd 


Uraxj, 


5 


ourt -western.  K.lL   i 

atv  Office.:  |»  Gfj-a^vcC  ?>t.        * 
StsLttoK  /CeKtevSt. 

TeL.  'Vloi.cJk.  3Z,7. 


BUSINESS    METHODS.  143 

Analysis   of   the    Printed    Advertisement. — The   two 

points  of  display  are  the  announcement  of  the  "shortest 
line  to  St.  Louis,'*  and  the  title  of  the  road.  These  are 
the  two  most  important  features  and  hence  bear  the 
largest  display.  Were  but  a  casual  glance  to  be  given 
to  the  ad  it  would  be  enough  to  create  the  thought  in 
the  reader's  mind,  "The  Southwestern  Railroad  is  the 
shortest  line  to  St.  Louis." 

The  three  paragraphs  following  are  of  nearly  equal 
importance  and  bring  out  the  following  points:  (1) 
Leaving  time  of  various  trains;  (2)  a  pleasant  time 
while  riding  because  of  completeness  and  fineness  of 
the  train;  (3)  rate  for  trip,  reasonable  enough  to  make 
the  reader  wish  to  go.  These  three  paragraphs  might 
be  transposed  and  not  lose  their  effect,  the  final  para- 
graph, however,  introducing  the  "personal  element"  or 
"direct  appeal"  to  the  reader,  "Why  not  go  this  way, 
TO-DAY,"  should  stand  at  or  near  the  last,  so  as  to 
leave  the  question  with  the  one  reading  the  ad.  The 
location  of  the  city  ofiice,  station,  and  the  telephone 
number  of  the  ticket  oflace  fall  naturally  after  the  name 
of  the  road. 

Stock  Catch-Lines. — These  have  already  been  re- 
ferred to  in  a  preceding  paragraph,  and  defined  as  a 
distinctive  word  or  line  always  used  to  designate  the 
f  rm  name.  It  is  safe  to  state  that  over  50  per  cent  of 
tlie  larger  firms  doing  business  to-day  make  use  of  a 
distinctive  device  embodying  the  name  of  the  firm,  and 
sometimes  the  address.  As  a  variant  of  this  a  pithy 
sentence  or  short  motto  is  often  used  accompanying 
the  name  of  the  business.  Railroads  often  use  such  a 
catch-line:  "The  Albert  Lea  Route;"  "The  Burlington 
Route;"  "The  Sunset  Route,"  are  examples.  Often  a 
part  of  a  name  is  always  displayed  and  made  more  im- 
portant than  the  remainder.  Thus  the  Consolidated 
Fire  and  Marine  Insurance  Company  is  one  of  a  large 
number  of  fire  and  marine  insurance  companies  doing 
business  in  the  same  field,  hence  the  catch-line  "CON- 
SOLIDATED," is  always  displayed  by  them. 

Distinctive  Borders  and  Composition. — Some  firms 
go  further  and  have  all  ads  set  having  a  distinctive 
border  adapted  by  them  or  even  cut  to  their  order  and 


144  BUSINESS     MAN'S     ENCYCLOPEDIA. 


SHORTEST  LINE 
BEST  TIME  TO 
ST.  LOUIS 


Our  best  tram  leaves 
Ckicago  daily  at  11.03  A.M., 
arrives  St.  Louis  7.30.  Other 
trains  at  3.05  and  9.30  P.  M. 

V  estiDuled  trains,  easy  ridmg 
cars,  courteous  attendants — 
all  kelp  to  make  a  deligktrul 
journey. 

Round  trip  rates  $6.00,  good 
in  ckair  cars  only ;  $8.00 
good  on  entire  tram. 

Why  not  go  this  -way  today? 


Southw^estern  R.  R. 

City  Office,  11  Grand  Street 
Station,  1  Center  Street  Telephone  Black  327 


BU8INESS     METHODS.  145 

copyrighted.  This  border  may  bear  no  relation  what- 
ever to  the  goods  or  product  sold  by  the  firm,  being 
designed  simply  to  attract  by  its  artistic  effect,  and  by 
continuous  use  be  associated  by  the  public  with  that 
particular  firm  using  it.  A  better  device  if  circum- 
stances permit  its  use,  is  one  representing  the  particu- 
lar article  the  advertisement  is  exploiting;  thus  a  firm 
advertising  watches  could  use  a  border  of  watches,  an 
ink  manufacturer  a  border  of  ink-bottles,  etc.  It  is 
common  for  regular  advertisers  to  use  ads  always  hav- 
ing the  same  general  appearance  owing  to  arrangement 
and  typographical  display.  Uniformity  of  composition, 
if  not  insisted  on  to  the  point  of  sameness,  is  always 
good  for  continuous  advertisers,  particularly  if  an  estab- 
lished house  is  advertising  their  customary  line. 

An  example  of  a  distinctive  border  is  illustrated  on 
page  146.  The  upper  half  represents  the  completed 
ad,  the  lower  half  the  first  rough  sketch.  The  border 
is  the  outline  of  the  distinctive  design  adopted  by  the 
advertising  road  and  besides  being  of  greater  use  in 
attracting  immediate  attention  to  the  ad  than  a  plain 
border,  it  is  an  extension  of  the  use  of  the  design 
adopted  by  the  railroad  for  its  catch-line,  which  consists 
of  a  black  background  the  shape  of  this  border  and 
bearing  in  white  letters  the  name  of  the  system. 

Selling  Points. — The  main  point  of  display  in  this  ad 
is  the  price,  $6  and  $8,  the  lower  half  (sketch  only 
shown)  being  devoted  to  the  strong  points  of  this  line 
over  its  competitors. 

Pirating  Distinctive  Designs. — One  of  the  annoy- 
ances to  which  a  live  adwriter  or  firm  is  subjected  to, 
is  the  imitation  of  successful  designs  and  schemes 
bearing  the  stamp  of  originality  and  distinctiveness. 
While  there  is  often  no  recourse  against  such  an  act 
on  the  part  of  another  advertiser,  yet  the  spirit  of  fair 
play  often  acts  as  an  offset  to  whatever  is  gained,  as  a 
reader  will  often  reason  that  a  firm  which  has  no  more 
originality  than  to  copy  another's  design  can  not  treat 
its  customers  better.  When  such  imitation  of  a  de- 
sign, device  or  trade-mark  comes  under  the  head  of 
unfair  competition  it  may  be  stopped  by  legal  pro- 
ceedings. 


146  BUSINESS    MAN'S    ENCYCLOPEDIA. 


$6    and    $8 

ST.  LOUIS 

and  Return 


$6  tickets  good  in  chair  and  club- 
room  cars  (no  extra  charge). 

$8  tickets  honored  in  sleepers  and 
parlor  ca,rs. 

Tickets  on  sale  December  24,  2S,  26, 
81;  January  1  and  2;  good  to  return 
until' J^lnuary  4. 


*-w*«Mia«^SSjia 


=1 


BUSINESS     METHODS.  147 

Accuracy  of  Facts  in  an  Advertisement. — It  would 
seem  superfluous  to  say  that  exact  accuracy  of  facts  is 
an  absolute  necessity  in  an  ad,  both  in  pictorial  rep- 
resentation and  in  general  statements,  but  often  ads 
run  at  considerable  expense  in  a  high  class  medium 
bearing  such  evident  errors,  as  to  be  of  no  effect  as  an 
advertising  medium.  An  ad  occupying  li/i  columns  in 
a  leading  monthly  magazine,  makes  the  following  re- 
markable statement  under  the  head,  "What  16  Horse 
Power  Means:" 

"The  mechanical  definition  of  one  Horse  Power 
means  the  power  necessary  to  lift  33,000  pounds  one 
foot  per  hour.  Sixteen  actual  horse  power  would  there- 
fore lift  528,000  pounds  one  foot  an  hour.'* 

The  adwriter  of  course  meant  to  say  "one  foot  per 
minute,"  and  "one  foot  a  minute."  As  if  this  were  not 
enough  inaccuracy  in  one  ad,  the  artist  had  represented 
an  arrangement  of  pulleys  hitherto  unknown  to  science, 
to  support  the  528,000  lbs.,  in  which  the  supporting 
rope  frays  to  small  cords  apparently  glued  to  the  block 
which  holds  the  528,000  lb.  engine  in  suspension. 

Space  occupied  by  an  ad  having  one  or  more  evident 
errors  is  worse  than  wasted  and  error  of  any  kind 
should  be  guarded  against  by  careful  revision,  especially 
if  the  matter  written  about  is  of  a  technical  character. 

illustrations  in  Newspaper  Advertising. — The  use  of 
cuts  to  strengthen  advertising  matter  is  nearly  uni- 
versal. Any  picture  will  serve  to  catch  the  attention, 
but  if  not  in  keeping  with  subject  in  hand,  if  not  to  the 
point,  it  does  not  serve  the  purpose  of  telling  something 
about  the  goods  for  sale.  Stock  cuts  should  be  avoided 
under  all  circumstances.  The  use  of  illustration  is  so 
common  that  the  reader  is  liable  to  recognize  the  dis- 
parity existing  between  the  cut  and  the  text  or  between 
the  cut  an(5  the  goods,  and  it  cannot  help  but  react 
upon  the  advertiser.  Then,  too,  the  cut  should  be 
adapted  to  the  paper,  printing  and  ink  with  which  it  is 
used. 

Kinds  of  Cuts. — The  simplest  form  of  illustration  is 
the  outline  cut.  This  was  much  in  use  several  years 
ago  and  is  still  employed  for  some  purposes.  Shaded 
cuts  are   liable  to  smudge   on  fast  or  lon^  runs   and 


148  BUSINESS     MAN'S     ENCYCLOPEDIA. 

should  not  be  used  unless  they  are  sure  to  print  well. 
The  cut  now  most  in  use  and  appearing  to  the  best 
advantage  is  the  hand  stipple.  This  is  a  pen  and  ink 
drawing  the  shading  effect  of  which  is  derived  from 
stippling  instead  of  lining.  If  not  reduced  too  fine  in 
the  engraving  process  it  prints  well,  even  on  coarse 
paper  and  from  a  stereotype.  Half-tones  have  two  disad- 
vantages, the  mechanical  difficulty  in  securing  a  good 
result  in  printing,  and  the  absolute  fidelity  with  which 
they  reproduce  the  original — if  a  photograph.  The  for- 
mer imperfection  may  be  obviated  by  using  a  coarse 
screen,  but  this  does  away  with  necessary  detail:  the 
latter  disadvantage  may  be  remedied  by  going  over  the 
photograph  and  adding  such  lines  as  are  necesary  and 
taking  out  those  which  are  not  needed.  Wood  engrav- 
ings are  comparatively  little  used  on  account  of  cost. 

If  an  advertiser  has  but  one  cut  and  wishes  to  use 
it  for  several  newspapers,  he  can  get  a  number  of  pa- 
pier mache  impressions  or  matrices  from  any  of  the 
daily  newspapers  on  his  list.  These  matrices  are  very 
handy  and  can  be  mailed  with  an  ad  with  very  little 
cost. 

Display  of  Illustrations. — The  same  general  rule 
should  be  observed  in  the  display  of  cuts  as  in  the  dis- 
play of  type.  Being  an  important  part  of  the  ad,  it 
should  stand  out,  should  not  be  crowded  or  have  the 
appearance  of  having  been  put  in  anywhere. 

Types. — The  adwriter  at  all  times  tries  to  have  his 
type  in  keeping  with  the  medium  which  he  is  using, 
the  article  which  he  is  advertising  and  the  class  of 
people  to  which  he  is  making  his  appeal.  For  in- 
stance, an  announcement  of  a  sale  of  art  goods  would 
call  for  script.  Old  English,  or  a  similar  type.  Cer- 
tain lines  of  trade  are  associated  with  utility  and  call 
for  a  serviceable  type,  as  De  Vinne  for  display,  and  a 
body  type  of  leaded  small  pica.  In  trade  papers  adver- 
tising heavy  machinery,  steel  rails,  etc.,  the  substantial, 
heavy-faced  Gothic  is  much  used. 

Borders. — A  border  to  an  ad  acts  the  same  as  a 
frame  to  a  picture,  throwing  it  into  bold  relief.  A  box 
of  four  rules  about  a  price  or  an  article  is  of  great  use 
in  making  it  show  up  in  a  large  or  blanket  ad. 


BUSINESS    METHODS.  149 

Sizes  of  Type. — The  size  of  type  is  expressed  in  two 
ways.  Old-time  printers  designate  types  by  their  old 
names,  as  nonpareil,  brevier,  long  primer,  pica,  etc.,  but 
now  the  common  designation  is  by  points.  A  point  is 
1-72  inch  and  6-point  nonpariel  would  be  6-72  inch  in 
width  (or  heighth  of  letter).  Type  faces  are  not  always 
of  the  same  size  as  the  body,  thus  we  may  have  a 
6-point  face  on  8-point  body. 

The  following  table  gives  the  old  names  of  type 
bodies  and  their  designation  in  points: 

Number 
Name —  Points. 

Ruby SVa 

Diamond    4^ 

Pearl 5 

Agate    5% 

Nonpareil 6 

Minion   7 

Brevier    8 

Bourgeois    , ^ 

Long  Primer   10 

Small  Pica  11 

2-line  Minion  or  English 14 

2-line  Brevier 16 

Great  Primer 18 

2-line  Long  Primer  or  Paragon 20 

2-line  Small  Pica 22 

2-line  Pica 24 

2-line  English 28 

5-line  Nonpariel 30 

4-line  Brevier 32 

2-line  Great  Primer 36 

Double  Paragon 40 

7-line  Nonpareil 42 

41  line  Small  Pica  or  Canon 44 

4-line  Pica   48 

9-line  Nonpareil 54 

5-line  Pica • 60 

6-line  Pica 72 

Type  Faces. — Type  faces  may  be  divided  according 
to  the  nature  of  their  use  into  two  distinct  classes: 
(1)  Body  or  text  types,  used  for  plain  paragraph  mat- 


150  BU8INES8    MAN'S    ENCYCLOPEDIA. 

ter,  such  as  that  of  books  and  newspapers;  (2)  fancy- 
types,  used  for  displayed  matter,  such  as  that  of  jobs. 

Body  or  text  faces  may  be  subdivided  again  into 
several  classes,  of  which  only  two  may  be  considered: 
(1)  Old  style;  (2)  modern.  The  difference  between 
these  faces  may  be  noted  with  a  little  practice.  Old 
style  has  a  lighter  effect  than  modern,  and  the  figures 
do  not  line  at  top  and  bottom.  The  most  striking  char- 
acteristic of  modern  is  the  contrast  between  the  light 
and  the  heavy  strokes.  Old  style  and  modern  faces 
should  not  be  mixed;  a  book  or  job  should  be  set  in 
one  face  or  the  other — ^not,  as  is  too  often  the  case, 
having  both  used  indiscriminately. 

Technical  Knowledge  Necessary. — A  certain  amount 
of  technical  knowledge  of  printing  is  necessary  to  the 
successful  writing  of  an  ad.  Theoretically,  at  least,  a 
man  should  be  a  printer  and  know  what  is  possible  to 
be  done  by  the  compositor,  proofreader,  and  pressman, 
as,  even  a  minor  change  may  mean  a  considerable  de- 
lay and  an  expenditure  of  an  amount  of  money  out  of 
proportion  to  the  results  obtained.  The  tables  and  rules 
and  other  technical  information  given  in  another  sec- 
tion of  this  book  will  often  be  of  service. 

Proof  Reading.  It  is  important  that  anyone  having 
to  do  with  advertising  should  understand  the  various 
marks  used  in  proof  reading.  An  explanation  of  such 
characters  is  fully  given  under  the  head,  "Marks  Used 
in  Proof  Reading,"  to  which  the  reader  is  referred. 

SHORT  CUTS 

A  Dictation  Help. — When  letters  are  dictated  to 
stenographers,  spoken  names  and  addresses  are  often 
misunderstood.  A  good  method  to  avoid  error  is  to 
number  the  letters  and  simply  designate  them  by  num- 
ber when  dictating.  In  this  way  the  correspondence 
may  be  turned  over  to  stenographers  to  secure  full 
addresses  without  danger  of  error. 

To  avoid  the  possibility  of  giving  the  same  number 
to  more  than  one  letter,  use  a  series  of  small  numbered 
cards.     Attach   these   cards  to   the   letters   with   small 


BUSINESS    METHODS,  151 

clips,   to   be  removed,    arranged   and   returned   to  the 
stenographer  at  the  close  of  the  day. — C.  E,  Locke. 

Employe's  Record. — It  will  be  found  decidedly  ad- 
vantageous, especially  in  shops  where  a  large  number 
of  people  are  employed,  to  use  a  workingman's  card 
system.  For  each  employe  a  card  should  be  used,  which 
should  contain  his  name,  residence  and  number  and 
the  department  in  which  he  is  employed.  On  this  card 
should  be  entered  the  employe's  daily,  weekly  and 
monthly  record,  together  with  reasons  for  absence  and 
cause  of  discharge,  in  such  an  event.  In  large  factories 
it  is  almost  impossible  for  the  executive  heard  of  the 
oflBce  to  know  personally  the  army  of  employes,  and 
the  record  suggested  will  enable  him  at  a  glance  to  de- 
termine not  only  the  qualifications  of  any  certain  em- 
ploye, but  to  determine  also  whether  one  is  deserving 
of  advancement  or  an  increase  of  salary. 

The  system  is  simple  and  effective. 

Letter  Forwarding. — The  old  style  letter  forwarding 
book  with  its  record  of  millions  of  mistakes  and  count- 
less inconveniences  has  been  superseded  by  the  modern 
system  which  is  gradually  finding  its  way  into  usage 
in  hotels  and  post-offices.  It  is  no  longer  necessary  to 
depend  on  the  book  that  has  been  worn  out  and  many 
pages  of  which  are  missing.  In  its  place  is  the  neat 
desk  drawer  cabinet,  with  its  system  of  alphabetical 
filing,  the  cards  of  which  never  show  the  wear  and  need 
never  be  lost.  When  an  order  for  forwarding  letters 
is  received  the  name  and  necessary  memoranda  is  writ- 
ten on  a  small  3x5  card  which  is  filed  in  the  cabinet  in 
alphabetical  order.  The  card  provides  space  for  full 
instructions  for  hotel  clerk  or  postmaster  and  its  use  is 
a  guarantee  of  accuracy. 

Sealing  Letters. — To  save  time  and  energy  in  moist- 
ening the  gummed  flaps  of  envelopes,  the  following  sim- 
ple scheme  is  used  by  a  number  of  business  houses. 
The  flaps  of  the  envelope  are  extended  and  placed  on 
the  desk  or  table  with  the  gummed  surface  exposed  and 
overlapping  the  flap  of  the  envelope  placed  on  top  of  it. 
In  this  way  the  gummed  surfaces  of  several  dozen  en- 


152  BUSINESS    MAN'S    ENCYCLOPEDIA. 

velopes  may  be  exposed  at  a  time.  A  moistened  sponge 
brushed  gently  over  this  surface  will  sufficiently  dampen 
the  gum  to  allow  the  envelope  to  be  sealed.  This  proc- 
ess is  much  quicker  than  to  moisten  each  flap  individu- 
ally, and  it  applies  the  moisture  uniformly  on  all  the 
envelopes. 

To  save  time  in  sealing  these  flaps,  a  small  clothes 
wringer  may  be  used  to  advantage.  The  machine  may 
be  easily  attached  to  the  edge  of  a  table  or  desk.  By 
passing  the  envelopes  with  the  moistened  flaps  through 
this  machine  several  hundred  envelopes  an  hour  may  be 
evenly  and  securely  sealed. 

Subscription  List. — Publishers  of  daily  and  weekly 
papers  should  have  one  system  for  keeping  track  of 
subscribers  who  receive  their  paper  by  mail,  and  one 
which  makes  each  account  directly  accessible  to  any 
employe  of  the  office,  whether  he  keeps  circulation 
books  or  not.  Subscribers  a^re  likely  to  call  for  a  state- 
ment of  account  at  any  time  and  the  circulation  clerk 
is  liable  to  be  out,  or  otherwise  engaged. 

When  an  order  is  received  it  should  be  made  out 
on  a  card  and  sent  to  the  mailing  room  for  the  name 
and  address  to  be  set  in  type  on  the  mailing  list.  The 
card  should  at  once  be  returned  to  the  office,  together 
with  a  copy  of  the  mailing  list.  A  clerk  should  check 
the  list  against  the  card  to  avoid  error. 

When  a  subscriber  pays  any  amount  on  his  subscrip- 
tion, it  should  be  posted  on  the  card  and  the  correct 
date  of  expiration  immediately  placed  on  the  mailing 
list. 

To  insure  against  errors  and  annoyances  the  mailing 
list  should  be  checked  with  the  card  every  time  a  pay- 
ment is  made. 

Circularizing. — Many  firms  use  the  Blue  Book  of 
large  cities  in  their  circularizing  work.  Sometimes  it  is 
necessary  to  issue  letters  and  announcements  quickly 
from  a  Blue  Book  list.  If  only  one  book  of  a  city  is 
owned,  only  one  addresser  can  be  employed  on  the  list 
at  a  time. 

As  a  book  is  somewhat  expensive,  and  as  the  list  is 


BUSINESS    METHODS.  155 

only  used  a  few  times  each  year,  a  small  concern  is  not 
prepared  to  purchase  five  or  ten  copies  simply  for 
emergencies. 

Though  a  firm  has  only  one  Chicago  Blue  Book,  yet 
it  can  put  ten  or  twenty  addressers  to  work  at  it.  The 
binding  is  removed  and  the  "loose-leaf"  man  punches 
holes  through  the  margin  of  the  book  and  fits  it  in  a 
loose-leaf  cover.  When  the  rush  hour  comes  and  the 
envelopes  are  wanted  quickly,  the  book  may  be  divided 
into  as  many  parts  as  is  required,  and,  with  rings  to 
hold  each  section  together,  the  work  proceeds.  When 
the  addressing  is  concluded,  the  parts  of  the  book  are 
brought  together  again  and  put  into  their  proper  places, 
and  the  book  is  complete. 

This  same  short  cut  may  be  made  with  telephone 
subscribers'  books  and  other  lists  of  this  class. — Alex. 
M,  Damon, 

Circularizing. — The  knowledge  that  each  customer 
received  the  circulars  each  month  without  going  to  the 
expense  of  paying  duplicate  postage  is  easily  secured 
by  the  following  system: 

Arrange  the  name  and  address  of  each  customer  on 
the  ledger  on  an  addressing  machine  list,  in  the  same 
order  as  the  accounts  are  arranged  in  the  books.  Each 
month  let  the  office  boy  address  a  set  of  envelopes  to 
all  of  these  names.  He  can  also  print  these  same  names 
and  addresses,  together  with  the  date  on  the  state- 
ments, thus  leaving  the  bookkeeper  nothing  to  do  but 
put  in  the  items  and  amount  due.  To  avoid  waste,  the 
first  time  the  list  is  printed  a  statement  is  headed  for 
all.  Those  that  were  not  used  at  that  time,  because 
some  accounts  were  inactive  or  had  discounted  their 
bill,  would  remain  over  and  be  used  the  next  time 
when  no  statement  would  be  headed  for  these.  Thus 
a  statement  is  always  on  hand  for  every  account.  The 
bookkeeper  would  use  all  the  envelopes  addressed  to 
those  who  were  entitled  to  a  statement,  and  those  re- 
maining would  be  handed  to  the  credit  man  for  his  in- 
spection, showing  him  who  had  not  made  any  purchase 
during  the  month.     A  mark  on  the  envelope  by   the 


154  BUSINESS     MAN'S     ENCYCLOPEDIA. 

bookkeeper  would  indicate  those  who  had  discounted 
their  bill 

A  circular  should  be  enclosed  in  each  of  the  en- 
velopes. This,  too,  can  be  done  by  a  boy  or  girl  in  the 
olRce.  By  this  method  every  one  on  the  list  receives 
the  mail  advertising  regularly,  and,  as  the  postage  must 
be  paid  on  the  statement  anyway,  additional  postage 
Is  paid  only  to  the  amount  of  those  who  would  receive 
no  circular  because  they  were  not  to  have  a  statement. 
— E.  D,  Dorsey. 

Filing  Correspondence. — For  a  man's  personal  cor- 
respondence there  is  nothing  equal  to  the  vertical  filing 
system. 

A  folder  is  used  for  each  regular  correspondent,  and 
in  this  folder  is  filed  all  of  the  correspondence,  in- 
cluding the  carbon  copies  of  your  replies.  Then  when 
one  wishes  to  refer  to  any  letter  he  has  all  correspond- 
ence before  him. 

These  folders  are  filed  on  edge  in  vertical  file 
drawers,  and  may  be  arranged  alphabetically  or  numer- 
ically. The  alphabetical  arrangement  is  best  suited  for 
a  small  volume  of  correspondence. 

In  many  cases  the  correspondence  is  of  such  a  na- 
ture that  it  will  be  more  often  referred  to  by  subject 
than  by  the  names  of  the  correspondents.  In  such  cases 
the  correspondence  is  indexed  by  subjects.  A  guide 
card  is  used  for  each  general  subject  and  the  folders 
containing  correspondence  relating  to  that  general  sub- 
ject are  arranged  in  front  of  that  guide.  A  separate 
folder,  appropriately  labeled,  is  used  for  each  subhead 
of  the  subject.  A  card  system  is  used  to  cross-index 
this  correspondence  by  names  of  the  individuals.  A 
card  is  used  for  each  individual  and  on  this  are  noted 
the  dates  of  letters  and  the  subject  under  which  it  is 
filed. 

One  drawer  of  a  vertical  file  furnishes  sufficient  ca- 
pacity for  the  ordinary  personal  correspondence.  It  has 
a  capacity  equal  to  from  eight  to  ten  flat  sheet  files. 
The  advantage  is  that  you  have  all  of  the  correspond- 
ence for  a  long  period  in  one  place,  instead  of  scat- 
tered through  numerous  transfer  cases. — G,  B,  James, 


BUSINESS     METHODS.  155 

Working  by  Schedule. — To  direct  one's  business  from 
a  central  point  is  the  first  step  to  success.  Many  bril- 
liant men,  blessed  with  almost  unlimited  energy,  fail 
in  life's  battle  because  they  know  little  of  system,  and 
practice  even  less. 

There  are  various  ways  in  which  this  schedule  can 
be  arranged,  but  a  card  schedule,  arranged  somewhat 
like  the  following,  will  be  found,  perhaps,  for  every 
business  the  most  convenient  and  useful. 

First,  have  a  card  for  the  morning's  work,  and  list 
thereon  the  routine  common  to  every  working  morn- 
ing of  the  year.  In  the  hour  column  enter  the  time  at 
which  the  duty  is  to  be  performed,  and  in  the  item  col- 
umn enter  the  duty.  The  afternoon's  work  should  be 
listed  in  a  similar  manner  on  a  similar  card. 

Then,  as  there  are  many  duties  to  be  performed  but 
once  or  several  times  a  week,  have  a  card  for  every 
working  day  of  the  week  and  list  on  each  the  particular 
work  for  that  day. 

A  monthly  set  of  cards,  similar  to  the  weekly  set, 
will  also  be  found  useful  on  which  to  list  duties  to  be 
performed  but  once  or  several  times  a  year.  The  card 
schedule  ideas  may  be  so  carried  out  as  to  include  all 
the  regular  details  of  any  business  or  branch  of  busi- 
ness, whether  small  or  large. 

By  beginning  the  day's  work  with  schedule  at  hand 
and  working  thereby  throughout  the  day,  a  card  sched- 
ule as  a  central  point  from  which  to  direct  one's  affairs 
will  prove  a  blessing  to  any  business  man  by  relieving 
him  of  much  needless  mental  strain,  and  by  avoiding 
many  an  embarrassment  that  often  occurs  simply  be- 
cause one  has  forgotten. 

Invoice  Filing. — Generally  speaking,  all  that  is  sai^ 
in  favor  of  vertical  files  for  letters  is  also  true  in  regard* 
to  the  invoices  of  purchases. 

In  the  majority  of  cases  the  alphabetical  systen? 
will  be  found  most  suitable;  it  is  simple  and  self-index- 
ing. The  divisions  into  which  the  alphabet  should  be 
divided  must  be  regulated  by  the  number  of  invoices 
to  be  handled. 

The  elasticity  of  a  vertical  file  permits  all  invoices 


156  BUSINESS    MAN'S    ENCYCLOPEDIA, 

from  any  firm  to  be  filed  in  one  place  in  chronological 
order.  This  is  a  point  that  is  too  apparently  desirable 
to  need  further  comment. 

The  numerical  system  possesses  certain  advantages 
which  should  no.t  be  overlooked.  It  admits  subdivisions 
to  be  made  to  correspond  to  certain  ledger  accounts. 
For  instance,  in  the  case  of  a  manufacturing  concern, 
sections  of  the  file  may  be  allotted  to  invoices  for  such 
items  as  General  Expense,  Manufacturing  Material,  Ex- 
tensions to  Plant,  Repairs  and  Renewals.  Each  section 
should  have  its  number  and  set  of  alphabetical  guides, 
so  that  with  the  use  of  a  suitable  index  for  the  names 
of  firms,  reference  can  be  made  immediately  to  any 
invoice.  The  Voucher  Record  index  may  be  used  in 
some  cases  for  this  purpose.  However,  if  the  invoices 
have  to  be  frequently  referred  to,  and  this  index  is  not 
one  which  admits  of  names  being  readily  found,  it  i)* 
obviously  advantageous  to  use  a  separate  card  index. 

When  the  voucher  system  is  used,  invoices  and  cred- 
its relating  ot  each  voucher  should  be  fastened  to- 
gether. A  stapling  machine  is  useful  for  this  purpose. 
In  cases  where  invoices  on  a  voucher  relate  to  more 
than  one  ledger  account  (if  the  plan  outlined  above 
be  followed),  they  should  be  separated  and  filed  in 
their  respective  divisions.  This  fact  must,  of  course, 
be  noted  in  the  index. — Wm,  A.  Ingram, 


THIS  BOOK  IS  DUB  ON  THE  LAST  DATE 
STAMPED  BELOW 

AN  INITIAL  FINE  OF  25  CENTS 

WILL  BE  ASSESSED  FOR  FAILURE  TO  RETURN 
THIS  BOOK  ON  THE  DATE  DUE.  THE  PENALTY 
WILL  INCREASE  TO  SO  CENTS  ON  THE  FOURTH 
DAY  AND  TO  $1.00  ON  THE  SEVENTH  DAY 
OVERDUE. 


"lev" 


;d 


-,ki4-^-t; 


yAR  171948 


-^ 


^^^^ 


DEC  1  0  1955  m 


18]un'56Px 


.lUNgH950CT^ 


dML 


-^^v^ 


-B^G43Je61_ 


410V-2J6498Q- 


8BC.CIR.  OK    h'W 


LD  21-100m-12,'43  (8796s) 


YB  06010 


^ 


6S6019 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


